Taxes, Parking and Transit: How the New Tax Bill Impacts Subsidies

If you’re an employer wondering how – or if – the new tax bill will impact your transportation policies, transportation experts say it could make directly subsidizing parking less attractive.

According to transportation research and policy organization Mobility Lab, “while some employers believe the bill has cut all tax subsidies offered by employers for parking and transit, this is not true. It has cut only one kind of subsidy…Indeed, the bill may lead employers to increase transit subsidies relative to parking subsidies.

“Previously, employers could write off $255 monthly in corporate taxes per employee subsidized for either transit or parking. That is no longer the case, although these subsidies do continue to benefit employers by reducing the payroll tax.”

Employees can still take a pre-tax benefit for parking and transit subsidies.

According to Mobility Lab, the tax change won’t affect parking for businesses that own their own spaces, or for whom parking is part of a bundled lease agreement. But employers that rely on third-party parking will see some changes.

Because many companies tend to directly subsidize parking, some transportation experts think that the changes in the tax bill may lead more employers to rethink their employees’ commute options.

“As more employers open up to the idea that they’re going to get taxed on subsidized parking, they may look to expand or increase their transit offerings,” says Jason Pavluchuk, a lobbyist for the Association for Commuter Transportation.

Are you an employer that’s interested in connecting more of your employees with options like transit? Or worried about the increasing costs of parking? Contact us to learn more about how we can help!




Photo by Ryan Searle on Unsplash

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