Are Parking Expenses Tax Deductible?

The tax deductibility of parking expenses has specific rules and nuances. Understanding Internal Revenue Service (IRS) guidelines is important for taxpayers, as deductibility often depends on the travel’s purpose.

Business Parking Deductions

Parking expenses incurred for business purposes are often deductible, but rules differ significantly based on whether an individual is self-employed or an employee. For self-employed individuals, parking fees are generally considered ordinary and necessary business expenses—costs that are common, accepted, and appropriate for the business. This can include parking at client sites, business meetings, or temporary work locations. Parking fines or tickets, however, are never deductible, even if incurred during business activities.

Self-employed individuals can deduct qualified parking expenses on Schedule C, Profit and Loss from Business. Examples include a rideshare driver paying tolls or parking fees, a salesperson paying for airport parking for a business trip, or a real estate agent parking to meet a client.

The Tax Cuts and Jobs Act (TCJA) of 2017 significantly changed the deductibility of unreimbursed employee business expenses. From 2018 through 2025, most W-2 employees cannot deduct these expenses, including parking fees, on their federal tax returns. This suspension applies even if the parking is for business-related travel.

However, specific exceptions exist. Employees may deduct these expenses if they are qualified performing artists, fee-basis state or local government officials, or individuals with impairment-related work expenses. Armed Forces reservists traveling more than 100 miles from home for reserve duties can also deduct certain travel expenses, which may include parking fees.

It is important to distinguish between parking for business travel and parking for commuting. Parking expenses incurred during business travel, such as visiting clients or attending off-site meetings, are generally deductible for self-employed individuals. In contrast, parking for regular commuting between a home and a principal place of business is not deductible, even if an individual works from home and occasionally travels to a central office.

For employers, the TCJA eliminated deductions for providing qualified parking benefits to employees, effective after December 31, 2017. This disallowance applies regardless of whether the employer pays a third party or owns/leases a facility. While employers cannot deduct these costs, employees can still receive such benefits tax-free, up to monthly statutory limits.

Non-Deductible Parking Scenarios

The Internal Revenue Service (IRS) categorizes certain parking expenses as non-deductible. A primary example is the cost of parking for regular commuting. Traveling between a taxpayer’s home and main place of work is considered a personal expense and cannot be deducted.

This non-deductible status applies regardless of distance or mode of transportation. Even if public transportation is unavailable, or if the taxpayer works from home and only occasionally travels to a physical office, these parking costs are not deductible. The IRS views commuting as the initial journey to begin work, not a business activity itself.

Parking expenses incurred for purely personal activities are also not deductible. This includes parking fees paid for shopping, entertainment, personal errands, or other non-business related travel. These expenses are considered personal living expenses and do not qualify for any tax deduction.

Other Deductible Parking Expenses

Beyond direct business operations, parking expenses can be deductible in specific, less common circumstances. These often relate to medical care, charitable contributions, or, for a limited group, moving.

Parking fees paid for medical care are deductible as part of overall medical expenses. This includes parking at a hospital, doctor’s office, or any other facility where medical services are received. These expenses are aggregated with other qualifying medical costs and are subject to an Adjusted Gross Income (AGI) threshold. For most taxpayers, only the amount of medical expenses exceeding 7.5% of their AGI can be deducted. For instance, if a taxpayer’s AGI is $60,000, they can only deduct medical expenses above $4,500.

Parking expenses incurred while performing services for a qualified charitable organization are also deductible. This deduction falls under charitable contributions. The service must be voluntary and unreimbursed, and the parking fees are considered out-of-pocket expenses directly related to the charitable activity. For example, parking fees paid while volunteering at a soup kitchen or a community event would be deductible.

For most taxpayers, moving expense deductions were suspended by the TCJA from 2018 through 2025. However, an exception exists for certain U.S. Armed Forces members. Active-duty military personnel who move due to a permanent change of station can deduct unreimbursed moving expenses, including parking fees and tolls. The standard mileage rate for moving expenses for Armed Forces members is 21 cents per mile for 2024 and 2025, plus parking fees and tolls.

Documenting Parking Expenses

Accurate record-keeping is crucial for substantiating tax deductions. Without proper documentation, the IRS may disallow claims during an audit, leading to potential penalties. Maintaining detailed records helps taxpayers demonstrate the legitimacy of their deductions.

For each parking expense, specific information should be recorded. This includes the exact amount paid, the date, the place (e.g., address or garage name), and the purpose (business, medical, or charitable).

Several methods can be used to maintain these records:
Keeping physical receipts or parking stubs.
Using mileage logs or mobile applications that track expenses.
Maintaining a detailed expense log or spreadsheet.
Utilizing credit card or bank statements, though additional detail about the purpose of the expense would still be necessary.