Parking tickets are not a business expense you can deduct, even when you got the ticket while driving for work. Internal Revenue Code Section 162(f) blocks a deduction for any amount paid to a government “in relation to the violation of any law,” and that language covers a $35 expired-meter ticket just as squarely as a large regulatory fine.1Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses The routine parking fees you pay to do your job are a different story, and those are fully deductible.
Why the Deduction Is Off the Table
A business expense has to be ordinary and necessary — common in your industry and helpful to your work. A parking fine is neither. It’s a penalty for breaking a local ordinance, not a cost of operating. The Treasury regulation implementing Section 162(f) makes the point explicit: the denial applies to civil penalties, criminal fines, and amounts paid to settle potential penalty liability.2eCFR. 26 CFR 1.162-21 – Denial of Deduction for Certain Fines, Penalties, and Other Amounts
The policy behind it is simple. If a $150 ticket were deductible, a business owner in the 32% bracket would effectively pay about $102 after tax savings. The tax code is not built to soften the sting a city intended when it wrote the ticket.
Section 162(f) does have a narrow exception for amounts that are restitution or that a taxpayer pays to come into compliance with the law.1Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses A parking ticket is purely punitive, so the exception does not help.
Parking Costs You Can Deduct
The everyday parking you pay for while conducting business is deductible because you’re buying a service, not paying a penalty. Meters near a client’s office, garage fees during a work trip, valet at a business lunch — all ordinary and necessary.
Two things worth knowing:
- If you use the standard mileage rate for your vehicle, you can still deduct business parking fees and tolls separately on top of that rate.3Internal Revenue Service. Publication 463 – Travel, Gift, and Car Expenses
- Parking at your own regular workplace is a commuting cost, not a business cost, so your daily garage fee at your own office building does not qualify.
Sole proprietors put deductible parking on Schedule C. It typically goes on line 9 with your car and truck expenses if you’re using the actual-expense method, or on line 27 as an other expense if you’re using the standard mileage rate.4Internal Revenue Service. Schedule C (Form 1040) – Profit or Loss From Business Corporations report the cost on the corporate return. Either way, keep the receipt or a dated log entry with the location. A line in your books that just reads “parking — $12” will not survive an audit.
Towing and Impound Fees After a Ticket
This is the edge case that trips people up. When your car gets towed for a parking violation, the bill usually bundles the fine itself with towing and daily storage. The fine is clearly out. So is the rest of the bill, because those charges arose directly from the violation — you would not have owed them if you had not broken the rule.1Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
A tow from private property at the property owner’s direction is different. That’s a private dispute, not a government penalty, so the cost can qualify as a deductible business expense if the trip was for business. The test is whether a government entity imposed the charge in connection with a legal violation. If yes, Section 162(f) shuts the door.
Reimbursing an Employee’s Parking Ticket
If you reimburse an employee for a parking ticket they picked up on the job, that payment is not a tax-free fringe benefit. It’s additional compensation. You add the amount to the employee’s wages, withhold and pay payroll taxes on it, and deduct it as wages rather than as a parking expense. The employee owes income tax on the reimbursement. The ticket itself remains non-deductible as a fine no matter who cuts the check.
What Happens If You Deduct One Anyway
Some owners quietly bury tickets in a miscellaneous or “other expenses” line, betting the amounts are too small to notice. The downside is real. If the IRS catches the improper deduction, you owe the tax that should have been paid plus a 20% accuracy-related penalty on the underpayment.5Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments On one ticket the penalty is trivial. Over years, across multiple vehicles or drivers, it adds up, and deducting a clearly prohibited item can invite scrutiny of the rest of the return.
The cleaner move is to record parking fines in your books as non-deductible. Most accounting software lets you flag an expense category that way, so the cash outflow shows up in your records without reducing taxable income. Your books stay accurate and nothing improper reaches your tax return.