Parking Cash Out

Employers may establish a "parking cash out" program whereby employees may choose to "cash out" the value of employer-provided parking, forego parking and receive the taxable cash value of the parking or receive a tax-free transit or vanpool benefit of up to $125 per month. If the employee accepts cash instead of a tax-free transit or vanpool benefit, then the employee will have to pay payroll and income tax on the amount and the employer will incur payroll taxes on the cash value.

Parking cash out works like this: the employer establishes a monthly value for a parking space at its site. Each employee could then choose among various commuting options in the following manner:

Keep the parking space with no charge.
Give up the parking space, commute via transit or vanpool and receive the amount of the parking space value in tax-free payment of your transit or vanpool fare.
Join a carpool and agree to give up all but one of the carpoolers' parking spaces. The carpoolers receive a share of the taxable cash payment each month.
Give up the parking space and choose to bicycle or walk to work and receive the value of the parking space in taxable income.

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