Federal law allows employees to pay transit, vanpool, and parking expenses with dollars that are exempt from federal income taxes and Social Security (FICA). Additionally, all personal transit/vanpool expenses are exempt from California income taxes and VDI.
Employees may purchase up to $240 per month in parking expenses and up to $125 per month in transit/vanpool expenses using pre-tax dollars.
Stanford's Office of Parking & Transportation Services, in conjunction with the University and Hospital & Clinics payroll departments, allows eligible employees to purchase parking permits, transit passes and commuter checks with pre-tax dollars via payroll deduction. Through the Pre-Tax Transit and Parking Program ("Program"), commuting faculty and staff will save money when they purchase long-term university parking permits, transit passes and commuter checks for personal commuting use. The exact amount saved by each individual will vary depending on an employee's tax bracket and the cost of the item purchased. The remainder of this document summarizes how the Program works.
All benefits-eligible employees who work 20 hours or more per week and are paid through Stanford University or Stanford Hospital and Clinics payroll are eligible to join the program. Individuals who are employed on campus but are not paid directly by the university or hospital are not eligible. In addition, contingent employees (temporary/casual), visiting scholars, and postdocs are not eligible to join the program. Bargaining unit members may participate as long as they satisfy the above stated eligibility criteria.
Payroll deduction purchases are limited to:
Non-Eligible Items: Locker rentals and towel service can still be purchased, as usual, using a form of payment other than payroll deduction.
Since the items purchased must specifically be for personal use, parking permits, transit passes and commuter checks purchased for family members or friends are not eligible under this program and must be purchased using cash, check, credit card or automatic bank deduction.
There are two ways to enroll:
Participants must sign a salary reduction agreement (embedded in the Parking Permit and Transit Pass/Commuter Check application) acknowledging that their paycheck will be reduced and that the items purchased will be used for personal commuting purposes to and from work only. The parking permit salary reduction agreement is contained in the parking permit application. Although payment for the permits will be deducted from a series of pay periods (see below), only one reduction agreement needs to be signed per year. This agreement will be in effect for the duration of the parking permit.
Eligible carpool primary members will also be able to purchase permits with pre-tax dollars. For more information on joining a carpool, refer to our Carpool page.
The transit pass/commuter check salary reduction agreement is similar to that used for parking permits. This agreement must be completed the first time transit passes or commuter checks are purchased from Parking & Transportation. It will give permission to Parking & Transportation to deduct all purchases of transit passes or commuter checks from the participant's salary. At the time of the initial purchase, individuals will determine their monthly transit cost and lock into a deduction schedule.
Payroll deduction is the vehicle through which pre-tax purchases are made possible. Parking & Transportation Services will provide a report to the Payroll department every pay period containing all of the deductions applicable to that pay period. Payroll deduction will only be available for pre-tax purchases. Customers not eligible to participate may not use payroll deduction as a payment method for items purchased from Parking & Transportation.
Once the salary reduction agreement is signed, either as part of the parking permit or transit pass/commuter check application, payments will be deducted from participant's paychecks as follows:
Deductions for all permit purchases will continue until the full price of the permit is paid or until the permit is returned (Daily 'scratcher' purchases occur as a one-time deduction, and permits are non-returnable). Employees are responsible for monitoring their paychecks to ensure that proper deductions are being made for parking permits. An employee who has chosen to pay for a parking permit through payroll deduction is liable for payment as long as the permit has not been returned to Parking & Transportation or until the permit expires.
Parking & Transportation Services reserves the right to deny participation in the Program if more than one scheduled deduction is missed. Participants must notify Parking & Transportation if they will no longer be on the University or Hospital & Clinics payroll system for any reason.
All deductions for transit passes, Caltrain parking permits, and commuter checks will occur as a series of monthly deductions. At the time of initial purchase, individuals will determine their monthly transit cost and lock into a deduction schedule for the rest of the year. The entire amount of a single month's transit expense will be deducted from the second pay period of each month's paycheck and will continue until all payments are completed or until cancelled (see cancellation policy below). Payroll deductions will be automatically adjusted without prior notice if the price of employees’ transit selection changes.
For those who choose to purchase transit passes all year round, deductions will be made through the end of August (this includes September passes purchased in August), and for those who purchase passes through the Academic calendar year, deductions will continue through June (this includes July passes purchased in June).
Individuals will have the option of obtaining their passes each month at the office of Parking & Transportation or of requesting U.S. postal delivery to their home address. There is a monthly cap (currently $125) on the amount that can be excluded from federal taxes; any excess above this monthly amount will be subject to federal income tax and FICA withholding. The full cost of transit will be excluded from California income and VDI taxes.
Parking & Transportation reserves the right to deny participation in the program if more than one scheduled deduction is missed.
All deductions for Stanford University and Stanford Hospital & Clinics employees will occur on the second pay period of the month, and will continue until all payments are completed.
Participants may upgrade, downgrade, or cease participation in the pre-tax payroll deduction program prior to their scheduled monthly deductions; however, participants may not make changes to any deductions already made for the current month. In addition, there will be no refunds for the unused portion of current month's permit or unused 'scratcher' permits. The return of a permit (excluding daily 'scratcher' permits, which are non-returnable) will result in the cancellation of future scheduled payroll deductions.
If you no longer need your permit, bank draft withdrawals will not stop until you return the permit to Parking & Transportation Services. You will be charged for months used at the multi-month rate, plus any extra days used at the daily 'scratcher' rate (up to the cost of an additional month).
Lost or stolen permits: In the event your permit is lost or stolen, you will continue to pay IN FULL for the lost or stolen permit in addition to half the current cost of a replacement permit through payroll deduction.
Cost savings for a particular participant resulting from participation in the Program are difficult to determine given that they are greatly reliant on the cost of the item purchased and the participant's tax bracket.
Since the Program has the general effect of lowering participants' taxable income (as reported on Form W-2), however slightly, Social Security benefits may be reduced for certain participants (i.e., those who do not reach the annual FICA wage cap. Your Stanford-provided benefits would not be affected.
The Pre-Tax Transit and Parking Program is administered by the Stanford Office of Parking & Transportation Services. The office reserves the right to request any reasonable information it deems necessary to determine that the requirements of the Program have been or will be met.
Any questions concerning eligibility for and operation of the Program should be addressed to the Stanford Office of Parking & Transportation Services, 340 Bonair Siding, Stanford, CA 94305-7255.
This Program is intended to provide benefits excluded from taxation under U.S. Internal Revenue Code Section 132(f) and California Revenue and Taxation Code Section 17149 (or other applicable laws). This Program is not governed by the Employee Retirement Income Security Act of 1974 (ERISA). The Program may be changed at any time by the University to effectuate or maintain compliance with these or other such laws. The University also reserves the right to modify this Program in any other respect, or discontinue this Program, at any time.