Non-adopting states

[Lori Friedman]

Can anyone point me to a comprehensive list of the states that haven't adopted the federal tax treatment of I.R.C. Sec. 125 -- either completely or partially?

Most states agree to the federal law. But, it's well known that New Jersey generally includes cafeteria plan elections in taxable income (with a few limited exception). I believe that Pennsylvania also picks and chooses the types of elections that are excludable from income.

I'm doing some piecemeal research that's taking too long. Has anyone compiled the information in a single resource?

[leevena]

Don't have a list, but I am in California. CA gives you a percentage of the deduction.

A suggestion I have is to go to each state's website and look at the appropriate tax return form. Don't know if it is faster, but it is a way for you to get the info.

[Peter Gulia]

For Pennsylvania's personal income tax, a benefit under an IRC-qualified cafeteria plan might or might not be compensation (one of Pennsylvania's eight classes of income) depending on the terms of the plan, whether the plan is discriminatory, and the nature of the benefit. For example, a health-care arrangement usually is not compensation, but a dependent-care arrangement is taxable compensation. The attached regulations explain the rules.

061_0101.pdf