Congressman Blumenauer of Oregon included a bike commuter benefit provision in HR1424, the $700 billion Wall Street bailout package that passed the house today and was signed by President Bush shortly afterward.
The benefit -- up to $20 per month -- begins with the new year in 2009. Employers may reimburse employees, tax free, for "reasonable" expenses related to their bike commute, including equipment purchases, bike purchases, repairs, and storage if the bicycle is used as a "substantial part" of the commuter's trip to work for the month. If you already receive another commuter tax-free fringe benefit (like a Commuter Check or EcoPass), you don't qualify, so multimodal commuters are out of luck.
SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS.
(a) In General- Paragraph (1) of section 132(f) is amended by adding at the end the following: ‘(D) Any qualified bicycle commuting reimbursement.’.
(b) Limitation on Exclusion- Paragraph (2) of section 132(f) is amended by striking ‘and’ at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ‘, and’, and by adding at the end the following new subparagraph: ‘(C) the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.’.
(c) Definitions- Paragraph (5) of section 132(f) is amended by adding at the end the following:
‘(F) DEFINITIONS RELATED TO BICYCLE COMMUTING REIMBURSEMENT-
‘(i) QUALIFIED BICYCLE COMMUTING REIMBURSEMENT- The term ‘qualified bicycle commuting reimbursement’ means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.
‘(ii) APPLICABLE ANNUAL LIMITATION- The term ‘applicable annual limitation’ means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year.
‘(iii) QUALIFIED BICYCLE COMMUTING MONTH- The term ‘qualified bicycle commuting month’ means, with respect to any employee, any month during which such employee--
‘(I) regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and
‘(II) does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).’.
(d) Constructive Receipt of Benefit- Paragraph (4) of section 132(f) is amended by inserting ‘(other than a qualified bicycle commuting reimbursement)’ after ‘qualified transportation fringe’.
(e) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.
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26 comments:
Howdy--
It's a start, and maybe it can help shift perceptions, especially if large corporations use it to help encourage cycling.
I don't think it does much for me, being self-employed from home, since it specifies employer reimbursement for travel to and from work. I fail on both counts.
However, I do travel about town for work, usually by bicycle. What I need is to be able to write off my milage as an expense, mile by mile, just as I would in my car. As it stands, I would actually realize such a substantial tax break for driving, it would almost be worth it financially to use the car.
Not only should there be a milage write off, it should be equal that of a car. I realize the expenses are far from equal, but it would be recognition that taking one car off the road has tremendous social benefits. After all, corporations can earn carbon credits for cleaning up--I'd be happy to take credit for the carbon I keep out of the atmosphere in the form of a tax credit.
Happy Trails,
Ron Georg
Moab
Nice door zone shot!
20 bucks a month. I'll try not to spend it all in once place. 8-)
Awesome! It's about time.
It's a baby step in the right direction. Too bad it had to get passed this way. I have to concur that $20 per month is a trifle and is highly unlikely to cause anyone to give up their car.
California's Complete Streets Act was signed by Governor Schwarzenegger on 9/30. Over time it's much more likely to encourage cycling than the Commuter Act (for Californians anyway).
Alan @ EcoVelo
Too bad it's all about miniscule tax incentives. The only way to change a culture is to quit subsidizing self destructive behavior and to properly expense services.
First steps:
1. All highways must in effect be toll roads,
2. Raise gas taxes in order to more fully fund road maintenance budgets,
3. Enforce emission standards,
4. Federal level of Complete Street legislation, and
5. Vehicle size rules on public roads or tax vehicles by weight not just book values.
The idea that Sarah Sixpack gets federal subsidies for driving a fuelish SUV to pick up her kids from school, allowed to pollute the surrounding air, destroy the roads, and lower safety standards unnecessarily is irresponsible.
Jack
What we need is someone to explain exactly how we bike commuters can take advantage of this...it's only $20 a month, but hey -- a step in the right direction.
Any way to create a tutorial on how to actually DO this?
Ghost - I have a followup planned that more or less describes the existing transit benefits and how the bike commuter benefit fits into that.
This is the first time I've ever been ashamed to be a cyclist - due to crass feeding at the political trough. Subsidies for cars is no excuse for subsidies for bikes. Instead of adding the second evil, cut the car subsidies!
I'll be taking this info to my employer tomorrow morning, but I need to know, so I can prove my case on this, how are they getting reimbursed? Is the government going to reimburse them?
Second, what is a reasonable amount of commuting per month? I generally ride to work 3-5 days per week, as long as the weather plays nice, is that enough?
Mike, the specific benefit is IRS Section 132(f). If they already provide benefits under this section of the IRS code (e.g. reimbursement for parking or mass transit) you'll have an easier time, I suspect.
Twenty bucks, and that's it. The inflation clause (6) explicitly mentions only the existing two amounts, so this one won't be increasing.
This is great. I have been getting $15/MONTH for 3 years. Now its ta free. This is like a __% (fill in your taxable rate) increase. And it cost me was $34K per person in my household to bail out the suits on wall street.
Thanks for spreading the word on this. However, it would have been even nicer if the woman in the photo was wearing a helmet. It might mash her nice hair, but that would be better than having to shave it for stitches or worse.
Fritz,
While all this is nice, its upon the company's discretion whether it wants to comply with fringe benefitting for bike commuters. Your company's HR may say 'oh, we elected not to comply with section 123 (f)'.
I mean 132 (f)
Yep, it's all elective. Section 132 is common for large corporations, but probably not so much for smaller businesses.
I think it is ironic that the sponsor of this bill ultimately stuck to his guns and voted against the bailout...so this "sweetener" didn't even succeed in buying his vote.
I do think this is a great idea, but there is confusion over what this does. It will allow an employee to designate $20/month of their salary to go to a Transportation Reimbursement Account--as is currently possible for parking and transit at much higher levels. The employer is not going to be giving you an extra benefit; the benefit is that you can avoid paying taxes on $20/month of your salary. The government is not paying you $20, it is just not taxing $20 of your salary.
How you take advantage of this benefit, starting in 2009, is to hope that your employer already has a section 132 plan in place and that this option can be added to it. The cost to the employer is purely administrative, but you do have to get past that initial hurdle if your employer does not currently do anything like this.
I do not see where this law limits cyclists to a choice between bike, park, or transit. My understanding was that you can currently designate both transit and parking, so why not also bike?
I agree with Steve A. Subsidizing cars does not create a justification for doing the same for bikes. This issue is a flea on a cow's butt compared to other issues that need to be addressed in this country. To celebrate this subsidy is really quite sad.
Henry S
Dave, slight correction -- many employers provide Section 132 benefits on top regular salary, instead of taking it out of the salary pre-tax like cafeteria plans. IRC 132 allows it to be done either way. My last three employers provided my transit benefit on top my salary, while the previous to that took the benefit from my paycheck first pretax.
As part of the defintion of "Qualified Bicycle Commuting Month," the code says "and does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1)’" (i.e. the other benefits).
So all the feds have done is subsidize commuting... or to put it another way, subsidize employment & tract housing separation.
If they were serious about reducing commuting costs (in both economic and environmental terms) then they would give substantial housing write offs to those that live close to where they work.
As it stands now, non-commuters are penalized for having the smallest commuting carbon footprint!
Anyone have any idea how to go about getting the $20 credit? My employer (federal government) provides transit checks at no cost already, so I assume it should be pretty easy. What do I need to do? What does my personnel person need to do? And is the credit only useful as reimbursement for actual expenses? For example, do I get a $13 check if I spend $13 to fix a flat and submit a receipt, or do I just get a $20 check each month?
Anon 8:40: First you need to find out if your agency will even offer that benefit for you. It's not required, even for Federal government agencies. Good luck!
That's my question as well: do I need to provide receipts/documentation for all of my biking expenes or do I simply receive an extra $20 a month? With that in mind, does my employer need to have receipts/proof on hand for all of their biking commuters? Any help would be much appreciated as my company is seriously considering implementing a program such as this for the year 2009.
Anon1:40 - receipts are unlikely. Section 132 has almost no paperwork requirements. Frankly, this section of the IRS code is wide open to fraud and abuse -- the transit checks are frequently available on Craigslist, for example.
Hey, I also commute to work via my bike. I would like to develop a mini proposal for my fortune 100 company that I work for... I am thinking this could be kind of a grass roots level of effort to promote this healthy lifestyle.
Has anyone created a little powerpoint summary of the commuter law, examples of companies that have implemented, clarifications in a FAQ section like how many days do you need to commute a month, ideas on how to implement it, etc. This would be so helpful in preparing a proposal. Tom
Tom, when you create this presentation let me know and I'll be glad to help you get the word out about it. I think you're breaking new ground here.
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