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 $4 a day to regular and extra hire employees who get to work without using a single occupant motor vehicle. Regular and extra hire employees who participate in the Green Commute Program by walking, bicycling, car or vanpooling, or riding transit for their trip to work are eligible for the $4 a day stipend.

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

511 Contra Costa

511 Contra Costa has managed a bicycle to work program for the past two years. One of the goals has been to motive persons to include riding their bicycle “the last mile” in conjunction with transit. Our program; the Bicycle Commuter Assistance Program, takes about 15 novice bicyclists, provides them with League of American Bicyclists “Road One” training, a helmet, lock and bicycle tune-up if needed and asks them to ride their bicycle to work, with a transit link if possible 2-3 days a week. The program runs from about May through September. We incentivize participants by providing them with refunds for their transit use and 52 cents for every mile they ride their bicycles to work up to $200 a month. We ask them to complete monthly diaries of their daily bicycle commute. Both years we have had over 100 applications for the program. This year 13 out of 14 participants completed the program. We plan to grow this program in the following years. Our goal is to have at least two classes of 15 participants next year.

Source: Matt Wood, Project Manager, 511 Contra Costa