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Payroll Deduction

Federal and state law allows employees to pay transit, vanpool, and parking expenses with dollars that are exempt from income taxes and FICA (Social Security and Medicare) withholding.

Employees may purchase up to $250 per month in parking expenses and and $130 per month in transit/vanpool expenses using pre-tax dollars.

P&TS, in conjunction with the University and the hospitals’ payroll departments, allows eligible employees to purchase parking permits, transit passes, Clipper Cash, and Commuter Checks with pre-tax dollars via payroll deduction. Through the Pre-Tax Transit and Parking Program, commuting faculty and staff save money when they purchase these items for personal use. The exact amount each individual saves will vary depending on the employee’s tax bracket and the cost of the item purchased.

Please note: Federal regulations specify that pre-tax dollars may only be used for an employee’s personal transportation, such as commuting to and from work. Transit passes or parking purchased via pre-tax payroll deduction may not be transferred to another individual. For more information, refer to the “Qualified Transportation Fringe Benefits (QTF)” section of the “Fringe Benefit Guide” on the Internal Revenue Service’s website.

The remainder of this page summarizes how the program works.

On this page:

Program eligibility


All benefits-eligible employees who

Not Eligible:

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Eligible items for purchase

Payroll deduction purchases are limited to:

Items purchased must specifically be for personal use. Transit products for family members or friends are not eligible under this program and must be purchased directly from transit agencies or related vendors.

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There are two ways to enroll:

Participants must sign a salary reduction agreement, contained in the parking permit application, acknowledging that their paycheck will be reduced and that the items purchased will be used for personal transportation purposes.

Although payment for the permits will be deducted from a series of pay periods, only one reduction agreement needs to be signed per year.

Eligible carpool 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 incorporated in the Application for Pre-tax Payroll Deduction for Commuting form. This agreement must be completed the first time transit passes, Clipper Cash, Commuter Checks, or Caltrain parking permits are purchased from P&TS. It will give permission to P&TS to deduct these purchases from the participant's salary and confirm that the item(s) will be used for personal transportation purposes.

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Payroll deduction for parking and carpool permits

Pre-tax purchases are made only through payroll deduction, and vice versa. Customers not eligible to participate may not use payroll deduction as a payment method for items purchased from P&TS. Customers may enroll or change their enrollment in the program throughout the year. P&TS will provide a report to the employee’s payroll department every pay period containing all of the deductions applicable to that pay period.

How it works

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-refundable). Employees are responsible for monitoring their paychecks to ensure that proper deductions are being made for parking permits. An employee who chooses to pay for a parking permit through payroll deduction is liable for payment as long as the permit has not been returned to P&TS or until the permit expires.

Participants must notify P&TS if they will no longer be on the University or the hospitals’ payroll system for any reason. P&TS reserves the right to deny participation in the program if more than one scheduled deduction is missed.

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Payroll deduction for transit passes, Clipper Cash, Commuter Checks, and Caltrain parking permits

All deductions for transit passes, Clipper Cash, Commuter Checks, and Caltrain parking permits, will occur as a series of monthly deductions. At the time of initial purchase, individuals will determine their monthly costs and establish a recurring deduction schedule. The entire amount of a single month's transit expense will be deducted from one paycheck per month and monthly deductions will continue until cancelled (cancellation policy below). Payroll deductions will be automatically adjusted if the price of the chosen transit pass changes.

Individuals will have the option of obtaining their passes each month at Parking & Transportation Services or requesting U.S. postal delivery to their home address. There is a monthly cap (currently $130) on the amount that can be excluded from taxes; any excess above this monthly amount will be subject to income tax and FICA withholding.

Employee responsibilities

  • Written requests for cancellation of pre-tax purchases must be received by the 9th of the month to take effect the next month. Cancellation requests received after the 9th of the month will take effect after the next month (for example, a cancellation request submitted at the end of January will take effect in March).
  • Employees are responsible for monitoring their paychecks to ensure that proper deductions are being made for their purchases.
  • Participants are also responsible for contacting P&TS if they will not be receiving a paycheck during the pay period in which a deduction is scheduled.
  • The participant is liable for all payments if a scheduled deduction is missed. Please contact P&TS to arrange for the missed payment(s) to be made through a future payroll deduction or other payment method.

P&TS reserves the right to deny participation in the program if more than one scheduled deduction is missed.

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Exchanges or returns

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 deductions already made. In addition, there will be no refunds for the unused portion of the current month's permit or for unused 'scratcher' permits. The return of a permit (excluding daily 'scratcher' permits, which are non-refundable) will result in the cancellation of future scheduled payroll deductions.

Transit passes, Clipper Cash orders, and Commuter Checks may not be returned or exchanged. Future transit deductions may be changed or terminated by the 9th of the month in order for the change to take effect for the next month.

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If you lose or no longer need your permit...

If you no longer need your permit, pre-tax payroll deductions will not stop until you return the valid permit to Parking & Transportation Services. Permits must be returned by the end of the month to stop deductions for the following month.

Lost or stolen permits: If your permit is lost or stolen, contact P&TS. You will be responsible for the full cost of the lost or stolen permit, and your remaining pre-tax payroll deductions will continue. If you choose to replace your permit, you will need to pay half the current cost of a replacement permit through cash, check, or credit card.

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Cost savings resulting from participation in the program will vary by individual based on the cost of the item(s) purchased and the participant's tax bracket.

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Effect on Social Security

Since the program has the general effect of lowering, however slightly, participants' taxable income (as reported on Form W-2), 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.

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Other Information


Parking & Transportation Services administers the Pre-Tax Transit and Parking Program. P&TS reserves the right to request any 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 Stanford Parking & Transportation Services at, 650.723.9362, or 340 Bonair Siding, Stanford, CA 94305-7255.

Status and Duration of the Program

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 (and/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.

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