A parking benefit (also called a commuter parking account) is a pre-tax benefit that lets you pay for work-related parking costs with tax-free dollars.
Eligible expenses
Your parking benefit can pay for parking:
Metered parking for work commutes
Monthly parking permits
Parking at or near your workplace
Parking at transit stations (for park-and-ride)
Parking garage or lot fees
The parking must be related to your commute to your workplace.
Ineligible expenses
You cannot use your parking benefit for:
Parking at your home
Parking for personal errands
Parking unrelated to your work commute
Overnight parking at hotels
Traffic violations or parking tickets
Transit fares (use a transit benefit instead)
Reimbursement
Pay for eligible parking expenses out-of-pocket. Submit receipts for reimbursement.
Funding
Parking benefits are funded through pre-tax payroll deductions. You elect to contribute a certain amount from each paycheck, and those funds are deducted before taxes are calculated.
Limits
The IRS sets annual limits on parking benefit contributions. For 2025, you can contribute up to $325 per month ($3,900 annually) in pre-tax dollars for parking expenses.
Your employer determines the actual contribution amount within these limits.
Taxes
Parking benefit contributions are not subject to federal income tax, Social Security tax, or Medicare tax. This reduces your taxable income and saves you money.
For example, if you contribute $200 per month to your parking benefit, you could save approximately $50-60 in taxes depending on your tax bracket.
Ownership
Parking benefit funds are set aside for you from your paycheck. Funds typically operate on a monthly basis and you cannot spend beyond the monthly limit, though policies vary by employer.
Check your specific plan details about fund rollover and forfeiture rules.
Other benefits
You can have both parking and transit benefits, but the amounts must reside in separate accounts. The IRS limits apply separately to each benefit type.