Changes to Federal tax laws have made it possible for employees to pay for a portion of personal monthly parking and transit/vanpool expenses with pre-tax salary deductions. More specifically, the legislation allows for up to $215 per month for parking and up to $110 per month for transit/vanpool expenses to be paid for by employees with dollars that are exempt from federal income taxes, as well as Social Security (FICA). Additionally, all personal transit/vanpool expenses are exempt from California income taxes and VDI.

Stanford's Office of Parking & Transportation Services, in conjunction with the University and Hospital & Clinics payroll departments, allows eligible, regular 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.

Program eligibility

All permanent/continuing employees of Stanford University or regular employees of Stanford Hospital and Clinics 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, students, postdocs, casual employees and temporaries are not eligible to join the program. Bargaining unit members may participate as long as they satisfy the above stated eligibility criteria.

^ back to top

Eligible items for purchase

Payroll deduction purchases are limited to:
• Two-year 'A' and 'C' permits (University employees ONLY)
• 12-month and 10-month 'A' and 'C' permits
• Multi-month permits and one-day 'scratcher' permits (University employees ONLY)
• Transit passes (ACE Train, BART, Caltrain, Muni, and SamTrans), Caltrain parking permits, and Commuter Checks.

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.

^ back to top

Enrollment

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.

^ back to top

Payroll deduction for parking & carpool permits

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.

How it works
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:

Parking permits
• Deductions for parking permits differ between single driver permits and carpool permits. However, in order to maximize participant benefits of the program, all permit costs will be divided into a series of monthly payroll deductions rather than from a single paycheck. This is so the monthly cap is never reached and the entire cost of the permit will be deducted from an individual's federally taxable income.
• One deduction will be taken per month. Depending on the date of your purchase, payments will be deducted from either your first or second check during the month.

Carpool permits
• Carpool Permits differ slightly from Parking Permits. Under Section 132 of the IRS code, only the primary member of the carpool is entitled to the tax exclusion. Therefore, other members may not pay for the carpool cost with pre-tax payroll deduction. Any portion of the cost of a carpool permit (after applying other members' Carpool Cash) may be paid for a) by carpool member(s) using any type of payment except payroll deduction, or b) with the primary member's pre-tax dollars using payroll deduction.
• If the members choose the primary member to pay for the balance of the carpool cost with pre-tax dollars, they could then reduce their portion of the reimbursement to the primary member by the amount that reflects his or her tax savings. Please refer to our web pages for more information regarding carpools, CAC, and Automatic Bank Deduction for rideshare members not participating in the Program.

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 & Clinic payroll system for any reason.

^ back to top

Payroll deduction for transit passes/commuter checks

All deductions for transit passes 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 that month's paycheck.

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. All deductions for Stanford Hospital & Clinics employees will occur on the second pay period of the month, and will continue until all payments are completed. All deductions for Stanford University employees puchasing Transit Passes will occur on the second pay period of the month (appearing on paychecks issued on the 22nd), and will continue until all payments are completed.

Individuals will have the option of obtaining their passes each month at the office of Parking & Transportation or request for U.S. postal delivery to their home address. There is a monthly cap (currently $110) 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.

Employees are responsible for monitoring their paychecks to ensure that proper deductions are being made for the transit pass or commuter checks. Participants are also responsible for contacting Parking & Transportation Services if, for any reason, they will not be receiving a paycheck during the pay period in which a deduction is scheduled. The participant is liable for all payments for transit pass and commuter check purchases if for any reason a scheduled deduction is missed.

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

^ back to top

Exchange or return of pre-tax permits, transit passes, and commuter checks

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.

^ back to top

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

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.

^ back to top

Savings

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.

^ back to top

Effect on Social Security

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.

^ back to top

Other Information

Administration
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.

Questions
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.

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 (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.

^ back to top