The Bicycle Commuter Act
Beginning Jan. 1, 2009, bicycling commuters became eligible for employer reimbursement of workplace transportation costs. Under the “Bicycle Commuter Act” cyclists are provided tax-free fringe benefit status, similar to workers who receive qualified transportation benefits, for utilizing public transit or driving his or her automobiles to and from work.
Under Section 132(f) of the Internal Revenue Code, bicyclists may use a special tax-favored workplace account to defray their commuting costs (purchase of a bicycle, bike lock, helmet, bike parking fees, shower facilities and general bike maintenance). Reimbursement will be provided (i) upon presentation of receipts; (ii) in the form of regular monthly payments; or (iii) through an employer sponsored voucher system.
The bicycle benefit is only available in a month that an employee meets two conditions: (i) regularly uses a bicycle for a substantial portion of travel between his or her residence and workplace; and (ii) does not receive any other qualified transportation benefit. The untaxed reimbursement benefit is equal to $20 a month ($240 a year) for bicycle commuter expenses.
In contrast, employees who commute by mass transit or drive to work and pay to park are entitled to an untaxed reimbursement up to $230 a month. Those who are eligible for both the mass transit and bicycle benefit may only receive one benefit in any month (most individuals will elect to receive the mass transit benefit and its higher monthly reimbursement).
In February, 2009, legislation was introduced (H.R. 863) to amend the tax code and allow employees to use both the transit and bike benefit in the same month. In the interim, the current monthly reimbursement limits will remain in effect through 2010 with an inflation adjustment.