The Tax Cuts and Jobs Act passed by Congress in December 2017 affects employer-provided qualified transportation fringe benefits, including workplace parking plans. Employee parking costs in 2018 are no longer a deductible expense, meaning they are subject to Social Security (or FICA Alternative for participating employees), Medicare and Federal withholding taxes.
What is changing?
Employees with 2018 pre-tax parking deductions will see an increase in their parking fee deduction beginning with the paycheck issued March 2, 2018, when paystubs will reflect any parking deductions as after-tax deductions. Employees who already have after-tax parking deductions are not affected by the new legislation.
How much is the tax impact?
The tax impact depends on an employee’s parking decal, income tax bracket and Form W-4 tax data. For example:
|Decal||Official Business||Orange||Staff Commuter|
|Deduction per pay period||$19.75||$14.75||$7.50|
|Social Security (6.2%)*||$1.22||$.91||$0.47|
|Federal Withholding (Est. 22%)||$4.35||$3.25||$1.65|
|Total Estimated Taxes**||$5.86||$4.37||$2.23|
*Employees participating in the FICA alternative program contribute 7.5%, instead of 6.2% for Social Security.
**These are estimates of the total taxes employees will pay on their parking decals. (The tax deductions will be made in addition to the deduction for the parking decal itself.)
What happens to any pre-tax parking deductions already made in 2018?
Any 2018 pre-tax parking deductions made before the March 2, 2018, paycheck are not affected.
What office can assist me if I have questions?
Please contact University Payroll and Tax Services for assistance at (352) 392-1231 or email@example.com. While the team cannot provide tax advice to employees, it can address general questions regarding payroll taxes.