Friday, February 11, 2011

Employees Now Can Use Pre-Tax Wages for Lactation Supplies

The IRS reversed a longstanding position yesterday when it announced that breast pumps and other lactation supplies are now tax deductible as medical expenses.  The decision is effective immediately and can be applied retroactively to the 2010 tax year.

One upshot of the new ruling is that employees will be able to use pre-tax wages from their flexible spending accounts and health savings accounts to pay for these purchases.  Because breast pumps and related supplies can cost $1,000 or more during a baby's first year of life, companies may see an increase in the use of pre-tax savings and spending accounts by their workers.

Finally, you may remember last year's FLSA amendment (DOL Fact Sheet here) requiring employers to allow reasonable break time for nursing mothers.  Well, this new IRS ruling almost certainly will lead to at least a modest increase in the number of working mothers who elect to take advantage of such break time, which, in turn, will increase the number of employers that will need to designate compliant spaces for those lactation breaks.

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