Imagine you own an efficient car, work about two miles from your home, and have an easy driving commute with free parking. If that parking were no longer free but cost you $5 per day and you had the option of pocketing an extra $5 for each day that you didn’t drive, you might dust off your Schwinn or your bus pass.
For many workers, the decision to drive to work is an economically rational one that minimizes their commute costs. The vast majority of employers offer free workplace parking, with few offering comparable benefits for transit, walking, biking, or other means of commuting. In effect, employers are incentivizing a behavior that increases roadway congestion, reduces physical activity, and increases emissions. Moreover, since lower-income households are less likely to own and have access to a private vehicle than moderate and higher-income households, free parking is a financial benefit that many lower-income employees cannot access.
Researchers from ICF and the Federal Highway Administration (FHWA) examined the city-level impacts of parking cash-out. Parking cash-out is a commuter benefits option where employers that provide free or subsidized parking at work also offer employees the option to take an equivalent cash payment, tax-free transit/vanpool benefit, or combination of cash payment and tax-free benefit instead of the parking subsidy.
Across nine U.S. cities, the analysis shows substantial potential for reductions in VMT, congestion, emissions, crashes, and equity. Scenario descriptions below:
| Scenario | Description | Applicable |
| 1. Monthly Parking Cash-out | Employers that offer free/subsidized parking to offer employees the option to cash-out their parking on a monthly basis. | Only to employers that provide subsidized parking |
| 2. Monthly Parking Cash-out with Only an Employer-Paid Transit/Vanpool Benefit | Employers providing free/subsidized parking must offer employees a transit or vanpool benefit paid by the employer, but not in excess of the value of the parking benefit. | Only to employers that provide subsidized parking |
| 3. Monthly Parking Cash-Out and Pre-Tax Transit Benefit | Same as Scenario 1, plus all other employers must make pre-tax transit benefits available to all of employees. | Applies to All Employers, Benefits Vary Based on Subsidized Parking Offerings |
| 4. Daily Parking Cash-Out and Pre-Tax Transit Benefit | Same as Scenario 3, but the cash-out must be offered as a daily cash-out option. | Applies to All Employers, Benefits Vary Based on Subsidized Parking Offerings |
| 5. Requirement to Eliminate Subsidized Parking Benefit + Provide Universal $5 Per Day Employer-Paid Non-SOV Commute Benefit | Free parking is eliminated and all employees are offered an employer-paid non-SOV commute benefit of $5 per commute day. | All employers |
Scenario 5 was (unsurprisingly) the most impactful policy change, with reductions in VMT ranging from 17% in Houston to 36% in Chicago and New York City. Daily cash-out was also more impactful than monthly, as people have to make the decision to drive every day, knowing that they can save money if they get to work without driving their own car. Watch a video of team members Gabby Abou-Zeid and Allen Greenberg presenting the results of the study, or view their slides.
The report is relevant for city-level policymakers, practitioners, transportation planners, and researchers looking for effective strategies to curb VMT and emissions with safety and equity at top of mind. The topic is also timely, given the recent legislation (H.R. 8555) proposed by House Representative Earl Blumenauer (OR-District 3) that would amend the Internal Revenue Code of 1986 to stipulate that a parking benefit is not a qualified parking fringe benefit unless an employer offers employees the option to receive an equivalent cash benefit or alternative tax-exempt benefit in lieu of the parking benefit.
The following locations have some form of parking cash-out:
Laws
Pre-tax benefits
Employer-provided
Tax Credits
