Pre-Tax Savings Example

The following are examples showing the benefit of pre-tax savings for a reserved parking permit that cost $100 per year in 2003-2004 and will cost $137 per year in 2004-2005:

  • An employee in the 10% Federal tax bracket purchasing a $137 reserved parking permit would save $32.40 per year in taxes, or $2.70 per month.  The net out-of-pocket cost for the reserved parking permit for the employee would be $104.60 calculated as follows:
    • $137 permit fee times 10% Federal tax = $13.70 tax savings
    • $137 permit fee times 7.65% Social Security & Medicare tax = $10.48 tax savings
    • $137 permit fee times 6% percent State tax = $8.22 tax savings
    • Total Tax Savings:  $32.40
  • An employee in the 15% Federal tax bracket purchasing a $137 reserved parking permit would save $39.25 per year in taxes, or $3.27 per month.  The net out-of-pocket cost for the reserved parking permit for the employee would be $97.75 calculated as follows:
    • $137 permit fee times 15% percent Federal tax = $20.55 tax savings
    • $137 permit fee times 7.65% Social Security & Medicare tax = $10.48 tax savings
    • $137 permit fee times 6% State tax = $8.22 tax savings
    • Total Tax Savings:  $39.25
  • An employee in the 25% Federal tax bracket purchasing a $137 reserved parking permit would save $52.95 per year in taxes, or $4.41 per month.  The net out-of-pocket cost for the reserved parking permit for the employee would be $84.05 calculated as follows (assuming the employee does not exceed the FICA wage base of $87,900 in 2004):
    • $137 permit fee times 25% Federal tax = $34.25 tax savings
    • $137 permit fee times 7.65% Social Security & Medicare tax = $10.48 tax savings
    • $137 permit fee time 6% State tax = $8.22 tax savings
    • Total Tax Savings:  $52.95