IRS Commuter Tax Benefit

Bicycle Commuters Added to IRS Commuter Tax Benefit

The $700 billion bailout legislation, the federal Emergency Economic Stabilization Act, contains language that expands the Qualified Transportation Fringe Benefit program to individuals who commute to work on their bicycles. The tax-code change takes effect in January 2009.

Under the program, employers may offer up to $20 a month to employees who ride their bikes to work. The money would be used to defray costs of commuting such as equipment or maintenance expenses. The benefit is offered to employees without increasing their taxable income and is a tax write-off to the employer. The Internal Revenue Service has not yet announced the details of implementing the program.

Under Section 132(f) programs already in place for transit subsidies for instance, the employer deducts the benefits from the employee’s gross wages and then provides the employee with a transit pass. These programs may be funded either entirely by the employer or the employee, or as a split contribution between the two.

Applying this to cycling could look something like this example. The benefit offered may require the submission of receipts by the employee for reimbursement. Or the employer may provide a voucher that is accepted at a bike shop. Additionally, the IRS will have to determine other details, such as the minimum participation level required for eligibility (e.g. 80% of all commute days are by bicycle).

Employers already offering bicycling incentives

Some employers already offer incentives to their bicycling workers. The University of South Florida shared this information.

Clif Bar & Company

To help employees get out of their cars and onto to their bikes for their commutes, Clif Bar & Company (in Berkeley) will provide employees who agree to commute by bike two days a month with up to $500 for the purchase of a commuter bike or to make commute-related retrofits to their existing bike. More information.

Source: Susan Heinrich, 511 Rideshare & Bicycling Coordinator, Metropolitan Transportation Commission

Marin County

Marin County, one of the largest employers in the SF Bay Area, has implemented a stipend as part of its Green Commute Program in response to concerns about traffic congestion and greenhouse gas emissions. The County offers offers a $10 Commuter Check Voucher if you live in Marin County and ride your bike to work an average of 8 or more days per month. The check can be used toward bicycle and equipment purchase, storage, and maintenance at participating bike shops. To be eligible for this incentive you need to have a ConnectYourCare and a 511 Trip Diary account. For more information on this incentive program go to http://www.co.marin.ca.us/depts/pw/main/green_commuting.cfm.

Source: Mary Hao, Director of Human Resources, County of Marin

511 Contra Costa

511 Contra Costa offers a $25 incentive to people who change their work commute from driving alone to carpooling, biking, or walking to work one day a week. To be eligible you must live or work in Contra Costa County, be 18 years of age, have access to a vehicle that you would normally drive alone to work, wish to try an alternative, and agree to complete a brief questionnaire. For more information you can visit their commuter incentive web page at https://511contracosta.org/commuterprogram/.

Source: Matt Wood, Project Manager, 511 Contra Costa