New tax law impacts employee parking fees

The Tax Cuts and Jobs Act passed by Congress in December 2017 ushered in changes to taxable deductions and benefits for employees and employers across the country.

The new law went into effect on January 1 with specific impacts to employer-provided transportation benefits, including how employee parking fees are treated. Due to the law’s complexity, we consulted several leading tax services to help us determine how to respond. As a result, employees’ parking fees will become an after-tax expense on their paycheck rather than a pre-tax deduction.  Biweekly paid employees will see this in their May 18 paycheck and monthly paid employees on their June 1 paycheck as that is the check for May work/deductions.

The parking fees will be taxed according to each individual’s income tax bracket. The impact to each employee will vary depending on an individual’s tax bracket and the amount paid for parking.  Parking fees will adjust in the Fall as usual with the most employees seeing an increase of about $3 a month. (Reserved space lots/levels will have higher increases.)  Employees will continue to be able to take advantage of benefits associated with using the MTA bus and RTA bus/train ride programs, as those programs remain unchanged.  Employees can review their payroll deductions on C2HR.