The Tax Cuts and Jobs Act eliminates the pre-tax parking fringe benefit currently offered through payroll deduction. Under prior law, payroll deductions for parking fees were offered on a pre-tax basis, meaning employees were not taxed on deductions used to pay for parking.
Effective July 1, 2019, parking permit fees will no longer be a pre-tax deduction. This means your taxable income will now include the cost of your parking permit. The change should have a minimal impact on net pay. For example, an employee who pays $30 per month in parking fees may see a $6 to $9 in additional tax withholding and an equal reduction in net pay. The tax withheld will vary based on your income tax bracket, W-4 information, and amount of pay.
Employees benefiting from the current pre-tax deduction will be automatically transitioned to post-tax payroll deductions. The amount deducted for parking will remain the same. Employees do not need to take any action.