There is a special rule for employee parking. (Near their place of work, of course, it does not apply to parking at home.)
Generally, any employee benefit is part of their taxable income unless it meets a particular exception. There is an exception allowed for providing commuting assistance to your employees, this includes a parking space, a car pool service with at least 6 riders, or public transit. You can provide the employee with a parking space that costs up to $260 per month tax-free to the employee, it does not have to be included in their wages. However, it is NOT a deductible business expense to you.
If the parking space is more than $260 per month, then the excess is taxable to the employee and you must include it in their W-2 box 1, 3 and 5 wages and withhold employment taxes. Since it is treated as taxable wages to the employee, the expense is deductible to you as a wage expense.
See here pages 20-21 <a rel="nofollow" target="_blank" href="
https://www.irs.gov/pub/irs-pdf/p15b.pdf">https://www.irs.gov/pub/irs-pdf/p15b.pdf</a>
