Cash for Parking

Commuter Choice Act

This bill requires employers who offer a parking benefit to their employees to also offer a cash-out equivalent option to employees who don’t drive.

Cash for Parking

About the bill

“Employers are not required to provide parking to employees, but if they do, it's an incentive to drive.”
— Charles Allen, Ward 6 Council Member, Washington, DC (2020)

What this bill does

This bill requires employers who offer parking benefits to their employees, such as free parking or reimbursement, to offer a cash benefit of the same value to employees who don’t drive to work. The benefit can take the form of transit support, a direct cash payout, or a combination. Employees are free to choose the benefit – parking or cash-out – that fits their commute.

Why it's needed

A free or subsidized parking spot is a meaningful employee benefit, but it’s only offered to employees who drive to work. Employees who walk, take the bus, ride a bike, or carpool are financially shortchanged for using other modes of transport. That imbalance encourages driving during peak congestion, adds cars to already crowded roads, and penalizes workers who made a different choice.

This bill helps cities achieve their objectives of reducing traffic congestion and pollution by requiring employers to offer the same value in commuter subsidies to everyone, regardless of how they get to work.

Frequently asked questions

What does this bill actually do?

Requires a cash-out option. Employers that subsidize parking must offer an equivalent benefit to employees who opt out, delivered as transit support, cash, or a combination.
Covers the full value. The benefit must equal the market rate cost of the parking subsidy.
Offers daily and monthly choices. Employees can opt out daily or monthly. Employers with 100 or more employees must offer a daily program.
Sets clear pricing rules. Employers must document market-rate parking costs using comparable public offers nearby, reassessed every three years.
Reduces parking requirements. Employers with a cash-out program can request reduced municipal parking requirements.
Requires reporting. Covered employers report every two years on participation rates.
Enforces compliance. Noncompliant employers face fines of at least double what employees should have received.
Promotes awareness. The state transportation department must provide multilingual compliance guidance to employers.

What’s wrong with getting free parking at work?

There’s nothing “wrong” with free parking, but people tend to use the “free” benefits that their employers provide them, even when it potentially is worth less to them than cash. Knowing you have free parking at your destination incentivizes people to drive to work, and when thousands of commuters have free parking in the morning, traffic congestion is at its worst when people need to get to work the fastest.

Giving more people incentives to take transit or carpool means that fewer people need to drive in the morning, leading to faster commutes, lower air pollution, and fewer cars on the road.

Why can’t cities lead on this issue themselves?

In some states, cities can individually pass reforms by themselves. Cities such as Boston and Washington, D.C. have passed similar legislation. However, some states may need to directly grant powers to cities if they want to create a parking cash-out program. Passing at the state level leads to clarity for employers with a consistent statewide standard and provides more people with more options.

What is wrong with existing policy?

Federal tax law incentivizes employer-paid parking by exempting it from federal income and payroll tax, making it cheaper for employers to offer it than a comparable salary increase. This incentive encourages traffic congestion and discourages choice, while also disproportionately and unfairly benefiting those who drive to work versus those who do not. Passing this legislation at the state level means thousands of commuters and households will be free to choose the benefit that matters more to them: parking, a transit pass, or cash.

Where has it been implemented?

Parking cash-out has encouraged significant shifts away from solo car trips where it has been implemented. A 1997 study of eight employers in Los Angeles County, California resulted in average reductions in single-occupancy vehicle trips by 12% and vehicle miles traveled by 652 per employee per year. Across the U.S, roughly 70% of employees drive to work alone; these changes have a meaningful effect on pollution and congestion that harms everyone.

Parking cash-out benefits can contribute to people’s earnings and would provide additional funding for federal and state government budgets, all while increasing employees’ future Social Security payments by increasing their income. In 2023, the Federal Highway Administration provided recommendations for structuring employee transportation benefits such that local requirements for cash-out alternatives could be revenue-neutral for employers.

How can I, as an individual, benefit from a parking cash-out policy?

It’s simple: you can get paid! Whenever you opt in to a parking cash-out program, the money you would have lost on an unused parking space goes directly to you. For daily cash-out programs, the choice is even more tangible – when you get to make the choice to drive or not on any given day, you can choose what works for you and get paid when you don’t need to drive. Monthly programs, while less flexible, would help commuters who could choose their best option to get to work for a given month, whether that is by bike, transit, or on foot.

The Legislation

Full model legislation text

Clean version

Annotated

Section 1. Title.

This Act shall be known and may be cited as the “Commuter Choice Act.”

This bill draws from California’s AB 2109, (1992) California’s Health and Safety Code § 43845, California Government Code §65089 and §65089.3, and Massachusetts H.2154/S.1346 (2025–2026))

Section 2. Definitions.

(a) “Employee” shall mean [We suggest referencing pre-existing definitions of “employee” in state legislation]

(b) “Employer” shall mean [We suggest referencing pre-existing definitions of “employer” in state legislation]

(c) “Market rate cost of parking” shall mean an amount no less than the cost of parking if the parking were obtained by an individual unaffiliated with the property on which parking is provided or by the employer through a transaction with no special rate due to a property lease.

(d) “Parking subsidy” shall mean the difference between the market rate cost of parking owned, leased or otherwise subsidized or paid for by the employer and the cost paid by an employee for the parking space.

(e) “Parking cash-out” shall mean an employer-funded program under which an employer offers to provide a benefit of equivalent financial value to the parking subsidy, which shall include offering employees a choice of tax-exempt employer-paid transit or vanpool subsidies, taxable cash or a combination of the two, such that the value of the total benefit received is equal to or greater than the market value of the parking space, less the additional payroll tax.

(f) “Qualified parking” shall mean parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work and is excluded from gross income tax within the IRS monthly dollar limitation.

(g) “Daily parking cash-out” shall mean employees elect to opt in or out of parking on a daily basis and receive the daily market rate cost of parking amount of benefit for each day that the employee chooses to forego driving alone to work; provided, if an employer offers a parking benefit exclusively for the days an employee is physically present at work, and the parking is not reserved for or available to the employee on other days, daily parking cash-out shall mean offering a cash-out option only for those days the employee is physically at work.

(h) “Monthly parking cash-out” shall mean employees elect to opt in or out of parking on a monthly basis and receive the monthly market-rate cost of parking amount of benefit for each month that the employees choose to forego driving alone to work; provided, however, that employees may still pay market rate for their own parking on certain days.

(i) “Designated Entity” shall mean a state entity that is allowed to level fines for employment law infractions

(j) “Reassessment request” shall mean a request submitted by an employee of an employer that is subject to parking cash-out requirements to reassess the market rate of the parking that their employer offers. This request must include at least two comparable public offers within one-quarter mile of the place of employment.

This section sets the definitions to be used in the bill, defining the relationships between employers and employees, how to determine how much parking is worth and how much parking is subsidized, and how a cash-out program would work.

Section 3. Legislative Findings and Purpose.

The Legislature finds that encouraging commuting to work by means other than a single-occupancy vehicle is a matter of statewide concern and that parking cash-out serves the public interest by reducing congestion and pollution, providing improved transportation options, and increasing tax revenue. This Act requires an employer that offers a qualified parking benefit to any of its employees to also offer such employees the option of a parking cash-out benefit or face fines.

This section states the public purposes that have long justified parking cash-out legislation: reducing drive-alone commuting, easing congestion and pollution, and treating employees more equitably when some receive a parking subsidy and others do not.

Section 4. Determining the Market Rate Cost of Parking

(a) The employer shall maintain appropriate evidence of its effort to establish the monthly or daily market rate cost of parking for at least 4 years.

(b) If the amount cannot be established because the parking is unavailable to the public, then an amount that is the monthly or daily price for use of a similar parking space within one-quarter mile of the place of employment shall be used; documentation supporting the appropriateness of the price shall be maintained by the employer, which could include evidence of a public offer, such as through a printed or otherwise publicly displayed advertisement, or a listing including price, such as on a publicly accessible parking smartphone application, from within the previous 6 months, available for acceptance by a member of the public for use of that parking space. If the employer uses a listing as the basis for determining the market rate cost of parking, then the employer shall maintain appropriate evidence of the offer it relied upon, such as a physical copy or photograph of an advertisement or a screenshot showing availability and price within a parking smartphone application, for at least 4 years from the time of any financial allowance offer or payment is made.

(c) If the parking used by the employee is not commercially available to the public and there is no commercially available parking within one quarter-mile of the place of employment, then the employer shall document and retain records related to the failed effort to find commercially available parking; the monthly market rate cost of parking shall, in this instance, mean the higher of the monthly price of the lowest priced transit serving within one-quarter mile of the site or 60 dollars per month, and the daily market rate cost of parking shall mean the higher of the daily price of the lowest price transit service within one-quarter mile of the site or 3 dollars per day. The 60 dollars per week and 3 dollars per day amounts shall be in 2026 dollars and thus shall be adjusted reflective of changes in the consumer price index.

(d) The market rate cost of parking shall be reassessed at least every 3 years.

(e) The Designated Entity shall administer the program and shall annually adjust the amount of the market rate cost of parking based on the changes in the state consumer price index. This adjustment shall apply in years when employers have not reassessed the market rate cost of parking.

(f) If there is a change in the market rate cost of parking greater than 25% between reassessments, an employee may submit a reassessment request to the Designated Entity. The Designated Entity may conduct a reassessment of the market rate cost of the parking.

This section establishes the methodology for establishing the value of parking and appeals for changing how much a parking cash-out benefit should be worth.

Section 5. Applicability.

(a) The requirements of this section shall apply to every employer that offers a parking benefit, but will not apply to employers that choose to discontinue offering a parking benefit; provided, however, that said employers shall continue to comply with report filing and record retention requirements related to the prior offering of parking benefits.

(b) This subsection shall not apply to employers with employees:

(i) Who are covered by a collective bargaining agreement that requires the employer to provide the employee subsidized parking, except if the agreement has expired or is extended after the date of enactment of this law.

(ii) Who are required to operate their own vehicle for employment purposes and who are reimbursed by their employers in accordance with Internal Revenue Service regulations for said use.

(iii) That have, prior to enactment, leased employee parking that prohibits subletting of parking and penalizes the reduction of the number of parking spaces subject to the lease, until the expiration of that lease excluding lease extensions.

(i) a daily parking cash-out program

(ii) a monthly parking cash-out program

(d) Employers that have 100 or more employees must implement a daily cash-out program; provided, however, that the employers may implement a monthly parking cash-out program only in the first year when required to implement a parking cash-out program.

(e) An employee shall only be entitled to parking cash-out after declining the parking benefit offered by the employer.

(f) Employers shall clearly inform each employee in writing of their right to receive parking cash-out, if applicable, and shall maintain records of related communications with employees.

This section determines how the programs work, what types of employers participate, whether or not a daily program or a monthly cash-out program applies to an employer.

Section 6. Reduction in Parking Requirements.

At the request of an employer that has implemented a parking cash-out program, the municipality in which this program exists shall grant an appropriate reduction in the parking requirements otherwise applicable, based on the demonstrated reduced need for parking; the space no longer needed for parking may be used for other purposes based on an agreement between the employer and the municipality.

This section allows for employers to request that cities reduce parking requirements where cash-out programs are implemented.

Section 7. Mitigating Neighborhood Impact.

A parking cash-out program may include a requirement that employee participants certify that they will comply with guidelines established by the employer designed to avoid neighborhood parking problems; employees not complying with the guidelines will be ineligible for parking subsidies and for the parking cash-out program.

This section requires employees to certify that they will work within guidelines set by their employers to not cause neighborhood parking disruptions, should they choose to receive a parking cash-out.

Section 8. Reporting.

(a) Each covered employer shall, by 1 year after enactment, and every 2 years thereafter, submit to the [the appropriate department to implement/enforce this law] a report that includes, but shall not be limited to:

(i) the total number of employees;

(ii) the number of employees offered a parking benefit, the market rate cost of parking and the amount, if any, that employees contribute to their parking expenses;

(iii) the number of employees using a parking benefit;

(iv) the number of employees offered parking cash-out, separately reporting offers of monthly and daily parking cash-out;

(v) the number of employees accepting the parking cash-out option separately reporting acceptance of monthly and daily parking cash-out; and

(vi) any other information required by the [the appropriate department to implement/enforce this law].

(b) Beginning 15 months after enactment, and every 2 years thereafter, the Designated Entity shall submit to [a state entity responsible for transportation topics such as a joint committee on transportation, a joint committee on revenue, a house/senate committee on ways and means] a report that includes, but shall not be limited to:

(i) aggregate data from the reports required by subsection (a);

(ii) an assessment of how many covered employers have not filed the report required by subsection (a); and

(iii) a description of actions that will be taken to achieve full compliance with this section.

This section establishes a reporting system so the state can measure compliance, track employee uptake, and understand the fiscal and transportation effects of the law.

Section 9. Awareness.

The [Department of Transportation] shall create a program to promote the awareness of parking cash-out and to offer related compliance assistance to employers. This program shall include, but not be limited to, information made available in a variety of languages in a prominent place on the website of the department.

This section directs the State’s [Department of Transportation] or other appropriate agency to create a multilingual awareness and compliance-assistance program for employers for their awareness about the program.

Section 10. Penalties for Noncompliance.

(a) The Designated Entity shall impose fines or penalties, no less than double the amount that employees would have been entitled to be offered as parking cash-out, and no more than 5 times that amount, for violations of this act.

(b) The Designated Entity shall appoint or hire no fewer than 2 employees to oversee the implementation of a parking cash-out program and the provisions of this act including, but not limited to,offering compliance assistance, imposing fines, preparing reports and managing awareness programs.

This section assigns penalty authority and staffing responsibility to a designated state entity, such as the state’s department of revenue, allowing for enforcement of the law.

Copy Bill Text

Tips for introducing in your state

Center choice and affordability.

Everyone can appreciate a few extra dollars. Frame this as giving employees the freedom to decide what commute benefit works best for them.

Connect it to congestion.

Free parking is a major contributor to rush hour traffic. This bill gives employees a financial reason to leave the car at home.

Target the right employers first.

The bill is most impactful for large employers in dense areas who already subsidize parking. Start your coalition there.

Reassure employers it's revenue-neutral.

Some employers assume this bill eliminates their parking subsidy. It doesn't. The cost shifts from one benefit to another.

Build in enforcement.

California passed a parking cash-out law in 1992, and Santa Monica was still the only city enforcing it 30 years later.

Check out the Pro-Housing Messaging Framework to help you craft your messages!

Lessons from other states

California, Rhode Island, and Washington, D.C. all have parking cash-out laws. In 2025, Massachusetts considered H.2154/S.1346, the closest legislative match to this model bill. Beyond cash-out requirements, some states, like Maryland and Colorado, encourage employers to implement parking cash-out programs or offer a tax refund for employees using ways to get to work other than a car. This model bill was developed in partnership with the Parking Reform Network, drawing on the strongest provisions of each enacted law.

The Federal Highway Administration estimates that monthly parking cash-out policies could help commuters avoid needing to drive millions of miles each year, reducing the number of car crashes and decreasing pollution from traffic. A daily cash-out policy, however, could double those benefits. Daily cash-out policies offer employees more choice, and are compensated for each day they choose not to park. Research from Minnesota and in Ireland have shown that employees are significantly more likely to take up daily parking cash-out policies because of the added flexibility compared to policies that force employees to choose whether they will use parking on a monthly basis.

An Assessment of the Expected Impacts of City-Level Parking Cash-Out and Commuter Benefits Ordinances, Federal Highway Administration (2023)
How Reviving a Forgotten California Law Can Make Commuting More Sustainable, SPUR, Alex Singal (2021)
Parking cash-out, Center for Efficient Mobility Texas AMU
Parking cash-out Factsheet 2025, Coalition for Smarter Growth (2025)
Get Paid to Leave Your Car at Home, Parking Reform Network, Lindsay Bayley (2022)

California — enacted 2022

Assembly Bill 2206 amended California’s parking cash-out statute in Health and Safety Code § 43845 to fix issues with enforcement and adjust for inflation. The statewide program applies to employers with a workforce of at least 50 people.

"AB 2206 makes the state cash-out program easier to implement so those who don't drive are also able to get the full benefits of the program." — Assemblymember Alex Lee (D-San Jose), Assembly press release, April 2022

Bill Would Benefit Workers Who Don't Use Free Employee Parking, Streetsblog California (2022)
AB 2206: Parking Cash-Out Programs Required for Employers with 50 or More Employees, Liebert Cassidy Whitmore (2022)

Rhode Island –– enacted 2004

Similar to California, Rhode Island requires that employers with more than 50 employees offer parking cash-out. However, Rhode Island’s law only applies to employers that are located within a quarter of a mile of a Rhode Island public transit service. Unlike California or Washington, DC’s laws, Rhode Island only requires that employers offer transit passes instead of cash.

Washington, D.C. — enacted 2020

In 2020, D.C. passed the Transportation Benefits Equity Amendment Act, more commonly known as the Parking Cashout Law. Amending the Sustainable DC Omnibus Amendment Act of 2014, Law 23-113 / Act 23-305 requires that employers who offer a parking benefit must offer either a Clean Air Transportation Fringe Benefit such as a Metro, bus, or bicycle benefit, pay a fee for each employee with a parking discount, or implement a transportation demand management plan to reduce employee car trips.

Since its 2022 launch, over a thousand employers have participated, and over 5,000 employees were able to make a choice between parking, commuter benefits, and cash, with nearly 20% choosing to take a more sustainable commute over parking.

“The bill is a modest, reasonable measure to help us achieve our climate goals” — Councilmember Mary Cheh (D-Washington, DC), Greater Greater Washington, 2020