2018 Tax Changes Affect Parking Decals

Alan M. West, Assistant Vice President and University Controller

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 these taxes on their paycheck issued March 2, 2018. Beginning with this paycheck, the employee’s pay stub will reflect any parking deductions as after-tax deductions.

Employees with 2018 after-tax parking deductions are not affected, since they are already subject to these taxes.

All future parking decal purchases and deductions will be on an after-tax basis only.

How much is the tax impact?
Depending on an employee’s selected parking decal, income tax bracket and Form W-4 tax data, the tax impact varies. 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 $.47
Medicare (1.45%) $.29 $.21 $.11
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.

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 taxhelp@admin.ufl.edu. While they cannot provide tax advice to employees, they can address general questions regarding payroll taxes.