26 U.S.C. § 132: Certain fringe benefits

(b) No-additional-cost service defined For purposes of this section, the term “no-additional-cost service” means any service provided by an employer to an employee for use by such employee if—

“any service provided by an employer to an employee for use by such employee” Opening words

Textual readingALL OF= a no-additional-cost service

(1) such service is offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services, and

(2) the employer incurs no substantial additional cost (including forgone revenue) in providing such service to the employee (determined without regard to any amount paid by the employee for such service).

“Substantial” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)

Cited by 3

(c) Qualified employee discount defined For purposes of this section—

Cited by 1

(1) Qualified employee discount The term “qualified employee discount” means any employee discount with respect to qualified property or services to the extent such discount does not exceed—

(A) in the case of property, the gross profit percentage of the price at which the property is being offered by the employer to customers, or

(B) in the case of services, 20 percent of the price at which the services are being offered by the employer to customers.

(2) Gross profit percentage

Cited by 2

(A) In general The term “gross profit percentage” means the percent which—

(i) the excess of the aggregate sales price of property sold by the employer to customers over the aggregate cost of such property to the employer, is of

(ii) the aggregate sale price of such property.

(B) Determination of gross profit percentage Gross profit percentage shall be determined on the basis of—

(i) all property offered to customers in the ordinary course of the line of business of the employer in which the employee is performing services (or a reasonable classification of property selected by the employer), and

(ii) the employer’s experience during a representative period.

(3) Employee discount defined The term “employee discount” means the amount by which—

(A) the price at which the property or services are provided by the employer to an employee for use by such employee, is less than

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1853(a)(2), substituted “are provided by the employer to an employee for use by such employee” for “are provided to the employee by the employer”.

(B) the price at which such property or services are being offered by the employer to customers.

(4) Qualified property or services The term “qualified property or services” means any property (other than real property and other than personal property of a kind held for investment) or services which are offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services.

Amended 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 401(a)(38), substituted “performing” for “peforming”.

(d) Working condition fringe defined For purposes of this section, the term “working condition fringe” means any property or services provided to an employee of the employer to the extent that, if the employee paid for such property or services, such payment would be allowable as a deduction under section 162 or 167.

Textual readingALL OF= a working condition fringe

“any property or services provided to an employee of the employer”

“if the employee paid for such property or services, such payment would be allowable as a deduction under section 162 or 167”

Cited by 11

(e) De minimis fringe defined For purposes of this section—

Cases: Boyd Gaming Corp. v. Commissioner, 106 T.C. 343 (1996)

Cited by 6

(1) In general The term “de minimis fringe” means any property or service the value of which is (after taking into account the frequency with which similar fringes are provided by the employer to the employer’s employees) so small as to make accounting for it unreasonable or administratively impracticable.

Cited by 3

(2) Treatment of certain eating facilities The operation by an employer of any eating facility for employees shall be treated as a de minimis fringe if—

Amended 1986, 1997

1997 Pub. L. 105-34 Pub. L. 105–34, § 970(a), inserted at end of concluding provisions “For purposes of subparagraph (B), an employee entitled under section 119 to exclude the value of a meal provided at such facility shall be treated as having paid an amount for such meal equal to the direct operating costs of the facility attributable to such meal.”
1986 Pub. L. 99-514 Pub. L. 99–514, § 1114(b)(5)(A), struck out “officer, owner, or” before “highly compensated employee” and “officers, owners, or” before “highly compensated employees” in last sentence.

Cited by 2

(A) such facility is located on or near the business premises of the employer, and

(B) revenue derived from such facility normally equals or exceeds the direct operating costs of such facility.

Cited by 1

The preceding sentence shall apply with respect to any highly compensated employee only if access to the facility is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees. For purposes of subparagraph (B), an employee entitled under section 119 to exclude the value of a meal provided at such facility shall be treated as having paid an amount for such meal equal to the direct operating costs of the facility attributable to such meal.

(f) Qualified transportation fringe

Amended 1992, 2017, 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70112(a)(5), struck out par. (8). Text read as follows: “Paragraph (1)(D) shall not apply to any taxable year beginning after December 31, 2017, and before January 1, 2026.”
2017 Pub. L. 115-97 Pub. L. 115–97, § 11047(a), added par. (8).
1992 Pub. L. 102-486 Pub. L. 102–486, § 1911(b), added subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h), respectively. Former subsec. (h) redesignated (i).

Cited by 13

(1) In general For purposes of this section, the term “qualified transportation fringe” means any of the following provided by an employer to an employee:

Amended 2008, 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70112(a)(1), struck out subpar. (D) which read as follows: “Any qualified bicycle commuting reimbursement.”
2008 Pub. L. 110-343 Pub. L. 110–343, § 211(a), added subpar. (D).

Cited by 3

(A) Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment.

Cited by 2

(B) Any transit pass.

Cited by 2

(C) Qualified parking.

(2) Limitation on exclusion The amount of the fringe benefits which are provided by an employer to any employee and which may be excluded from gross income under subsection (a)(5) shall not exceed—

Amended 2008, 2009, 2010, 2013, 2014, 2015, 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70112(a)(2), struck out subpar. (C) which read as follows: “the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.”
2015 Pub. L. 114-113 Pub. L. 114–113, § 105(a)(2), struck out concluding provisions which read as follows: “In the case of any month beginning on or after the date of the enactment of this sentence and before January 1, 2015, subparagraph (A) shall be applied as if the dollar amount therein were the same as the dollar amount in effect for such month under subparagraph (B).”
2014 Pub. L. 113-295 Pub. L. 113–295 substituted “January 1, 2015” for “January 1, 2014” in concluding provisions.
2013 Pub. L. 112-240 Pub. L. 112–240 substituted “January 1, 2014” for “January 1, 2012” in concluding provisions.
2010 Pub. L. 111-312 Pub. L. 111–312 substituted “January 1, 2012” for “January 1, 2011” in concluding provisions.
2009 Pub. L. 111-5 Pub. L. 111–5 inserted concluding provisions.
2008 Pub. L. 110-343 Pub. L. 110–343, § 211(b), added subpar. (C).

Cited by 7

(A) $175 per month in the case of the aggregate of the benefits described in subparagraphs (A) and (B) of paragraph (1), and

Amended 1998, 2015

2015 Pub. L. 114-113 Pub. L. 114–113, § 105(a)(1), substituted “$175” for “$100”.
1998 Pub. L. 105-178 Pub. L. 105–178, § 9010(c)(1), substituted “$100” for “$65”.
1998 Pub. L. 105-178 Pub. L. 105–178, § 9010(b)(2)(A), substituted “$65” for “$60”.

Cited by 1

(B) $175 per month in the case of qualified parking.

Amended 1986, 1989, 1998

1998 Pub. L. 105-178 Pub. L. 105–178, § 9010(b)(2)(B), substituted “$175” for “$155”.
1989 Pub. L. 101-239 Pub. L. 101–239, § 7841(d)(19), substituted “section 151(c)(3)” for “section 151(e)(3)” in introductory provisions.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1853(a)(1), substituted “are deceased and who has not attained age 25” for “are deceased”.

Cited by 1

(3) Cash reimbursements For purposes of this subsection, the term “qualified transportation fringe” includes a cash reimbursement by an employer to an employee for a benefit described in paragraph (1). The preceding sentence shall apply to a cash reimbursement for any transit pass only if a voucher or similar item which may be exchanged only for a transit pass is not readily available for direct distribution by the employer to the employee.

Amended 1986

1986 Pub. L. 99-272 Pub. L. 99–272, § 13207(a)(1), added par. (3).

Cited by 1

(4) No constructive receipt No amount shall be included in the gross income of an employee solely because the employee may choose between any qualified transportation fringe and compensation which would otherwise be includible in gross income of such employee.

Amended 1997, 1998, 2008, 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70112(a)(3), struck out “(other than a qualified bicycle commuting reimbursement)” after “transportation fringe”.
2008 Pub. L. 110-343 Pub. L. 110–343, § 211(d), inserted “(other than a qualified bicycle commuting reimbursement)” after “qualified transportation fringe”.
1998 Pub. L. 105-178 Pub. L. 105–178, § 9010(a)(1), amended heading and text of par. (4) generally. Prior to amendment, text read as follows: “Subsection (a)(5) shall not apply to any qualified transportation fringe unless such benefit is provided in addition to (and not in lieu of) any compensation otherwise payable to the employee. This paragraph shall not apply to any qualified parking provided in lieu of compensation which otherwise would have been includible in gross income of the employee, and no amount shall be included in the gross income of the employee solely because the employee may choose between the qualified parking and compensation.”
1997 Pub. L. 105-34 Pub. L. 105–34, § 1072(a), inserted at end “This paragraph shall not apply to any qualified parking provided in lieu of compensation which otherwise would have been includible in gross income of the employee, and no amount shall be included in the gross income of the employee solely because the employee may choose between the qualified parking and compensation.”

(5) Definitions For purposes of this subsection—

Amended 2008, 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70112(a)(4), struck out subpar. (F) which defined qualified bicycle commuting reimbursement, applicable annual limitation, and qualified bicycle commuting month.
2008 Pub. L. 110-343 Pub. L. 110–343, § 211(c), added subpar. (F).

(A) Transit pass The term “transit pass” means any pass, token, farecard, voucher, or similar item entitling a person to transportation (or transportation at a reduced price) if such transportation is—

“any pass, token, farecard, voucher, or similar item entitling a person to transportation (or transportation at a reduced price)” Opening words

Textual readingANY OF= a transit pass

(i) on mass transit facilities (whether or not publicly owned), or

(ii) provided by any person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle meeting the requirements of subparagraph (B)(i).

“any pass, token, farecard, voucher, or similar item entitling a person to transportation (or transportation at a reduced price)” Enclosing § 132(f)(5)(A)

Textual readingALL OF= transportation qualifying for transit pass

“provided by any person in the business of transporting persons for compensation or hire”

“such transportation is provided in a vehicle meeting the requirements of subparagraph (B)(i)”

Cited by 1

(B) Commuter highway vehicle The term “commuter highway vehicle” means any highway vehicle—

“any highway vehicle” Opening words

Textual readingALL OF= a commuter highway vehicle

(i) the seating capacity of which is at least 6 adults (not including the driver), and

Textual readingALL OF= seating capacity at least 6 adults

“the seating capacity of which is at least 6 adults (not including the driver)”

Cited by 1

(ii) at least 80 percent of the mileage use of which can reasonably be expected to be—

“Reasonably” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)

(I) for purposes of transporting employees in connection with travel between their residences and their place of employment, and

(II) on trips during which the number of employees transported for such purposes is at least ½ of the adult seating capacity of such vehicle (not including the driver).

Cited by 1

(C) Qualified parking The term “qualified parking” means parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work by transportation described in subparagraph (A), in a commuter highway vehicle, or by carpool. Such term shall not include any parking on or near property used by the employee for residential purposes.

Cited by 1

(D) Transportation provided by employer Transportation referred to in paragraph (1)(A) shall be considered to be provided by an employer if such transportation is furnished in a commuter highway vehicle operated by or for the employer.

(E) Employee For purposes of this subsection, the term “employee” does not include an individual who is an employee within the meaning of section 401(c)(1).

(6) Inflation adjustment

Amended 1998

1998 Pub. L. 105-178 Pub. L. 105–178, § 9010(b)(1), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “In the case of any taxable year beginning in a calendar year after 1993, the dollar amounts contained in paragraph (2)(A) and (B) shall be increased by an amount equal to—
“(A) such dollar amount, multiplied by
“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins.
If any increase determined under the preceding sentence is not a multiple of $5, such increase shall be rounded to the next lowest multiple of $5.”

(A) In general In the case of any taxable year beginning in a calendar year after 1999, the dollar amounts contained in subparagraphs (A) and (B) of paragraph (2) shall be increased by an amount equal to—

Amended 1998, 2018

2018 Pub. L. 115-141 Pub. L. 115–141, § 101(b), struck out concluding provisions which read as follows: “In the case of any taxable year beginning in a calendar year after 2002, clause (ii) shall be applied by substituting ‘calendar year 2001’ for ‘calendar year 1998’ for purposes of adjusting the dollar amount contained in paragraph (2)(A).”
1998 Pub. L. 105-178 Pub. L. 105–178, § 9010(c)(2), inserted concluding provisions.

Cited by 1

(i) such dollar amount, multiplied by

(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 1997” for “calendar year 2016” in subparagraph (A)(ii) thereof.

Amended 2017, 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70112(b), substituted “1997” for “1998”.
2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(d)(5), substituted “for ‘calendar year 2016’ in subparagraph (A)(ii) thereof” for “for ‘calendar year 1992’ ”.

(B) Rounding If any increase determined under subparagraph (A) is not a multiple of $5, such increase shall be rounded to the next lowest multiple of $5.

Amended 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13201(b)(3)(F), struck out before period at end “, determined by substituting ‘calendar year 1992’ for ‘calendar year 1989’ in subparagraph (B) thereof”.

(7) Coordination with other provisions For purposes of this section, the terms “working condition fringe” and “de minimis fringe” shall not include any qualified transportation fringe (determined without regard to paragraph (2)).

(g) Qualified moving expense reimbursement For purposes of this section—

Amended 1986, 1992, 1993, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 11048(a), substituted “For purposes of this section—” for “For purposes of this section,”, designated remainder of existing provisions as par. (1) and inserted heading, substituted “The term” for “the term”, and added par. (2).
1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(2), added subsec. (g) and redesignated former subsec. (g) as (h). Former subsec. (h) redesignated (i).
1992 Pub. L. 102-486 Pub. L. 102–486, § 1911(b), added subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h), respectively. Former subsec. (h) redesignated (i).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1151(e)(2)(A), in amending subsec. (g) generally, designated par. (2) as the entire subsection, struck out former subsec. heading, “Special rules relating to employer”, struck out “For purposes of this section—”, and struck out par. (1) which read as follows: “All employees treated as employed by a single employer under subsection (b), (c), or (m) of section 414 shall be treated as employed by a single employer for purposes of this section.”

Cited by 1

(1) In general The term “qualified moving expense reimbursement” means any amount received (directly or indirectly) by an individual from an employer as a payment for (or a reimbursement of) expenses which would be deductible as moving expenses under section 217 if directly paid or incurred by the individual. Such term shall not include any payment for (or reimbursement of) an expense actually deducted by the individual in a prior taxable year.

(2) Suspension for taxable years beginning after 2017 Except in the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station, or an employee or new appointee of the intelligence community (as defined in section 3 of the National Security Act of 1947 (50 U.S.C. 3003)) (other than a member of the Armed Forces of the United States) who moves pursuant to a change in assignment that requires relocation, subsection (a)(6) shall not apply to any taxable year beginning after December 31, 2017.

Amended 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70113(d), inserted “, or an employee or new appointee of the intelligence community (as defined in section 3 of the National Security Act of 1947 (50 U.S.C. 3003)) (other than a member of the Armed Forces of the United States) who moves pursuant to a change in assignment that requires relocation” after “change of station”.
2025 Pub. L. 119-21 Pub. L. 119–21, § 70113(c), substituted “beginning after 2017” for “2018 through 2025” in heading and struck out “, and before January 1, 2026” after “December 31, 2017” in text.

Cited by 2

(h) Certain individuals treated as employees for purposes of subsections (a)(1) and (2) For purposes of paragraphs (1) and (2) of subsection (a)—

Amended 1986, 1988, 1989, 1992, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(2), added subsec. (g) and redesignated former subsec. (g) as (h). Former subsec. (h) redesignated (i).
1992 Pub. L. 102-486 Pub. L. 102–486, § 1911(b), added subsec. (f) and redesignated former subsecs. (f) and (g) as (g) and (h), respectively. Former subsec. (h) redesignated (i).
1989 Pub. L. 101-239 Pub. L. 101–239, § 7101(b), added par. (9).
1988 Pub. L. 100-647 Pub. L. 100–647, § 6066(a), added par. (8).
1986 Pub. L. 99-272 Pub. L. 99–272, § 13207(b)(1), added par. (6).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1114(b)(5)(B), added par. (7).

Cited by 5

(1) Retired and disabled employees and surviving spouse of employee treated as employee With respect to a line of business of an employer, the term “employee” includes—

Amended 1986, 1988, 1989

1989 Pub. L. 101-239 Pub. L. 101–239, § 7841(d)(7), substituted “to highly compensated employees” for “to officers, etc.,” in heading.
1989 Pub. L. 101-140 Pub. L. 101–140, § 203(a)(2), amended par. (1) to read as if amendments by Pub. L. 100–647, § 1011B(a)(31)(B), had not been enacted, see 1988 Amendment note below.
1989 Pub. L. 101-140 Pub. L. 101–140, § 203(a)(1), amended par. (1) to read as if amendments by Pub. L. 99–514, § 1151(g)(5), had not been enacted, see 1986 Amendment note below.
1988 Pub. L. 100-647 Pub. L. 100–647, § 1011B(a)(31)(B), substituted “there shall” for “there may be” and “who are” for “who may be” in last sentence.
1986 Pub. L. 99-514 Pub. L. 99–514, § 1151(g)(5), inserted “For purposes of this paragraph and subsection (e), there may be excluded from consideration employees who may be excluded from consideration under section 89(h).”
1986 Pub. L. 99-514 Pub. L. 99–514, § 1114(b)(5)(A), struck out “officer, owner, or” before “highly compensated employee” and “officers, owners, or” before “highly compensated employees”.

Cited by 2

(A) any individual who was formerly employed by such employer in such line of business and who separated from service with such employer in such line of business by reason of retirement or disability, and

Cited by 1

(B) any widow or widower of any individual who died while employed by such employer in such line of business or while an employee within the meaning of subparagraph (A).

Cited by 1

(2) Spouse and dependent children

Cited by 1

(A) In general Any use by the spouse or a dependent child of the employee shall be treated as use by the employee.

Cited by 1

(B) Dependent child For purposes of subparagraph (A), the term “dependent child” means any child (as defined in section 152(f)(1)) of the employee—

“any child (as defined in section 152(f)(1)) of the employee” Opening words

Textual readingANY OF= a dependent child

(i) who is a dependent of the employee, or

(ii) both of whose parents are deceased and who has not attained age 25.

For purposes of the preceding sentence, any child to whom section 152(e) applies shall be treated as the dependent of both parents.

Amended 2004

2004 Pub. L. 108-311 Pub. L. 108–311 substituted “152(f)(1)” for “151(c)(3)” in introductory provisions.

(3) Special rule for parents in the case of air transportation Any use of air transportation by a parent of an employee (determined without regard to paragraph (1)(B)) shall be treated as use by the employee.

Amended 1986

1986 Pub. L. 99-514 Pub. L. 99–514, § 1899A(5), substituted “such use is” for “such use in”.

(i) Reciprocal agreements For purposes of paragraph (1) of subsection (a), any service provided by an employer to an employee of another employer shall be treated as provided by the employer of such employee if—

Amended 1986, 1992, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(2), redesignated subsec. (h) as (i). Former subsec. (i) redesignated (j).
1993 Pub. L. 103-66 Pub. L. 103–66, § 13101(b), amended heading and text of par. (8) generally. Prior to amendment, text read as follows: “Amounts which would be excludible from gross income under section 127 but for subsection (a)(2) thereof or the last sentence of subsection (c)(1) thereof shall be excluded from gross income under this section if (and only if) such amounts are a working condition fringe.”
1992 Pub. L. 102-486 Pub. L. 102–486, § 1911(b), (c), redesignated subsec. (h) as (i), redesignated pars. (5) to (9) as (4) to (8), respectively, and struck out former par. (4), “Parking”, which read as follows: “The term ‘working condition fringe’ includes parking provided to an employee on or near the business premises of the employer.” Former subsec. (i) redesignated (j).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1853(a)(3), substituted “subsection (c)(2)” for “subsection (c)(2)(B)”.

(1) such service is provided pursuant to a written agreement between such employers, and

(2) neither of such employers incurs any substantial additional costs (including foregone revenue) in providing such service or pursuant to such agreement.

(j) Special rules

Amended 1992, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(2), redesignated subsec. (i) as (j). Former subsec. (j) redesignated (k).
1992 Pub. L. 102-486 Pub. L. 102–486, § 1911(b), redesignated subsecs. (i) to (k) as (j) to (l), respectively.

(1) Exclusions under subsection (a)(1) and (2) apply to highly compensated employees only if no discrimination Paragraphs (1) and (2) of subsection (a) shall apply with respect to any fringe benefit described therein provided with respect to any highly compensated employee only if such fringe benefit is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees.

Textual readingALL OF= Paragraphs (1) and (2) of subsection (a) apply to highly compensated employee

“with respect to any fringe benefit described therein provided”

“with respect to any highly compensated employee”

“only if such fringe benefit is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees.”

“Substantially” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)

(2) Special rule for leased sections of department stores

(A) In general For purposes of paragraph (2) of subsection (a), in the case of a leased section of a department store—

Cited by 1

(i) such section shall be treated as part of the line of business of the person operating the department store, and

(ii) employees in the leased section shall be treated as employees of the person operating the department store.

(B) Leased section of department store For purposes of subparagraph (A), a leased section of a department store is any part of a department store where over-the-counter sales of property are made under a lease or similar arrangement where it appears to the general public that individuals making such sales are employed by the person operating the department store.

(3) Auto salesmen

(A) In general For purposes of subsection (a)(3), qualified automobile demonstration use shall be treated as a working condition fringe.

Cited by 1

(B) Qualified automobile demonstration use For purposes of subparagraph (A), the term “qualified automobile demonstration use” means any use of an automobile by a full-time automobile salesman in the sales area in which the automobile dealer’s sales office is located if—

“any use of an automobile by a full-time automobile salesman in the sales area in which the automobile dealer’s sales office is located” Opening words

Textual readingALL OF= qualified automobile demonstration use

(i) such use is provided primarily to facilitate the salesman’s performance of services for the employer, and

(ii) there are substantial restrictions on the personal use of such automobile by such salesman.

“Substantial” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)

(4) On-premises gyms and other athletic facilities

(A) In general Gross income shall not include the value of any on-premises athletic facility provided by an employer to his employees.

(B) On-premises athletic facility For purposes of this paragraph, the term “on-premises athletic facility” means any gym or other athletic facility—

“any gym or other athletic facility” Opening words

Textual readingALL OF= an on-premises athletic facility

(i) which is located on the premises of the employer,

(ii) which is operated by the employer, and

(iii) substantially all the use of which is by employees of the employer, their spouses, and their dependent children (within the meaning of subsection (h)).

“Substantially” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)

Amended 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(3)(B), substituted “subsection (h)” for “subsection (f)”.

(5) Special rule for affiliates of airlines

(A) In general If—

Textual readingALL OF= affiliate treated as same line of business

(i) a qualified affiliate is a member of an affiliated group another member of which operates an airline, and

(ii) employees of the qualified affiliate who are directly engaged in providing airline-related services are entitled to no-additional-cost service with respect to air transportation provided by such other member,

then, for purposes of applying paragraph (1) of subsection (a) to such no-additional-cost service provided to such employees, such qualified affiliate shall be treated as engaged in the same line of business as such other member.

(B) Qualified affiliate For purposes of this paragraph, the term “qualified affiliate” means any corporation which is predominantly engaged in airline-related services.

(C) Airline-related services For purposes of this paragraph, the term “airline-related services” means any of the following services provided in connection with air transportation:

(i) Catering.

(ii) Baggage handling.

(iii) Ticketing and reservations.

(iv) Flight planning and weather analysis.

(v) Restaurants and gift shops located at an airport.

(vi) Such other similar services provided to the airline as the Secretary may prescribe.

(D) Affiliated group For purposes of this paragraph, the term “affiliated group” has the meaning given such term by section 1504(a).

(6) Highly compensated employee For purposes of this section, the term “highly compensated employee” has the meaning given such term by section 414(q).

(7) Air cargo For purposes of subsection (b), the transportation of cargo by air and the transportation of passengers by air shall be treated as the same service.

(8) Application of section to otherwise taxable educational or training benefits Amounts paid or expenses incurred by the employer for education or training provided to the employee which are not excludable from gross income under section 127 shall be excluded from gross income under this section if (and only if) such amounts or expenses are a working condition fringe.

(k) Customers not to include employees For purposes of this section (other than subsection (c)(2)), the term “customers” shall only include customers who are not employees.

Amended 1992, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(2), redesignated subsec. (j) as (k). Former subsec. (k) redesignated (l).
1992 Pub. L. 102-486 Pub. L. 102–486, § 1911(b), redesignated subsecs. (i) to (k) as (j) to (l), respectively.

(l) Section not to apply to fringe benefits expressly provided for elsewhere This section (other than subsections (e) and (g)) shall not apply to any fringe benefits of a type the tax treatment of which is expressly provided for in any other section of this chapter.

Amended 1992, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(2), (3)(C), redesignated subsec. (k) as (l) and substituted “subsections (e) and (g)” for “subsection (e)”. Former subsec. (l) redesignated (m).
1992 Pub. L. 102-486 Pub. L. 102–486, § 1911(b), redesignated subsecs. (i) to (k) as (j) to (l), respectively.

(m) Qualified retirement planning services

Amended 1993, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 665(b), added subsec. (m) and redesignated former subsec. (m) as (n).
1993 Pub. L. 103-66 Pub. L. 103–66, § 13213(d)(2), redesignated subsec. (l) as (m).

Cited by 1

(1) In general For purposes of this section, the term “qualified retirement planning services” means any retirement planning advice or information provided to an employee and his spouse by an employer maintaining a qualified employer plan.

Textual readingALL OF= qualified retirement planning services

“any retirement planning advice or information provided to an employee and his spouse”

“by an employer maintaining a qualified employer plan”

(2) Nondiscrimination rule Subsection (a)(7) shall apply in the case of highly compensated employees only if such services are available on substantially the same terms to each member of the group of employees normally provided education and information regarding the employer’s qualified employer plan.

(3) Qualified employer plan For purposes of this subsection, the term “qualified employer plan” means a plan, contract, pension, or account described in section 219(g)(5).

(n) Qualified military base realignment and closure fringe For purposes of this section—

Amended 2001, 2003

2003 Pub. L. 108-121 Pub. L. 108–121, § 103(b), added subsec. (n) and redesignated former subsec. (n) as (o).
2001 Pub. L. 107-16 Pub. L. 107–16, § 665(b), added subsec. (m) and redesignated former subsec. (m) as (n).

(1) In general The term “qualified military base realignment and closure fringe” means 1 or more payments under the authority of section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966 (42 U.S.C. 3374) (as in effect on the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009).

Amended 2009

2009 Pub. L. 111-92 Pub. L. 111–92, § 14(a)(1), substituted “the American Recovery and Reinvestment Tax Act of 2009)” for “this subsection) to offset the adverse effects on housing values as a result of a military base realignment or closure”.

Cited by 1

(2) Limitation With respect to any property, such term shall not include any payment referred to in paragraph (1) to the extent that the sum of all of such payments related to such property exceeds the maximum amount described in subsection (c) of such section (as in effect on such date).

Amended 2009

2009 Pub. L. 111-92 Pub. L. 111–92, § 14(a)(2), struck out “clause (1) of” before “subsection (c)”.

(o) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.

Amended 2003

2003 Pub. L. 108-121 Pub. L. 108–121, § 103(b), added subsec. (n) and redesignated former subsec. (n) as (o).