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Taxation of Employee Compensation: California

Taxation of Employee Compensation requirements for other states

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

  • Special tax rules apply in California to three popular fringe benefits: group-term life insurance, moving expense reimbursements, and educational assistance. See Group-Term Life Insurance; Moving Expenses; and Educational Assistance.
  • An employer with 20 or more full-time employees who work in the City of San Francisco are required to offer employees the option of pre-tax pay deductions to fund mass transit commuter benefits. See City of San Francisco.
  • An employer with 50 or more employees who work within the San Francsico Bay Area Air Quality Management District are required to offer employees the option of pre-tax pay deductions to fund mass transit commuter benefits. See San Francisco Bay Area.
  • An employer with 10 or more full-time employees who work in the cities of Berkeley or Richmond are required to offer employees the option of pre-tax pay deductions to fund mass transit commuter benefits. See City of Berkeley; City of Richmond.