California's Parking Cash-Out Law

This page last reviewed October 30, 2017

State law requires certain employers who provide subsidized parking for their employees to offer a cash allowance in lieu of a parking space. This law is called the parking cash-out program. The intent of the law is to reduce vehicle commute trips and emissions by offering employees the option of "cashing out" their subsidized parking space and taking transit, biking, walking or carpooling to work. For years, negative tax implications limited the implementation of the law. But in 1998, federal legislation fixed this problem.

The Air Resources Board has developed a guide that explains the law and answers the questions most frequently asked by employers.

Employers: The guide will help you determine whether you must implement a parking cash-out program.

Employees: If your employer pays for all or part of your parking, ask your employer if you are entitled to the parking cash-out choice.

California's Parking Cash-Out Law: An Informational Guide for Employers

  • August 2009 (PDF)

If you have questions about the parking cash-out law, please contact Tom Scheffelin at (916) 327-7847.

Parking Cash-Out Case Study Research

This report presents eight case studies of employers who have complied with California's parking cash-out requirement. Cashing out reduced total vehicle emissions for commuting by 12 percent, with a range from 5 to 24 percent for the eight firms. Review or download the abstract or the report.

Commuter Choice Program

A federal program that complements parking cash-out is called the Commuter Choice Program. It provides for benefits that employers can offer to employees to commute to work by methods other than driving alone. To learn more about Commuter Choice, visit the following website:

Federal Transit Administration: Commuter Choice Web Page:
Commuter Choice Program.