Taxation of Benefits Provided to Same-Sex Couples: Federal Guidance and 18 New State Sections Now Available

Author: Rena Pirsos, XpertHR Legal Editor

The Supreme Court has recognized the validity of same-sex marriage and a subsequent Internal Revenue Service revenue ruling now allows an employer to exclude from income tax the value of health insurance benefits it provides to an employee's same-sex spouse and/or their dependents.

However, there is much variation among state laws in this regard; some states follow the federal law and some states do not. State laws also vary regarding recognition of same-sex civil unions and/or domestic partnerships and whether benefits provided to an employee's partner in such a relationship are subject to state income tax. Moreover, many of the state laws remain unsettled or have recently changed because of pending court cases challenging either the recognition or prohibition of same-sex relationships.

Accordingly, the existing Taxation of Employee Benefits: State Requirements sections of the Employment Law Manual have been updated and 18 new state sections have been added. The Federal and State Tax Treatment of Same-Sex Couple Benefits - Chart in the Quick Reference Tool also has been updated.

The following are the 18 new state sections: