A little-known incentive called the Bicycle Commuter Benefit is hidden in the tax code, and it can benefit both bicycle commuters and their employers.
Tax season is in full swing and many of us are ticking boxes on our forms and schedules, looking for any extra pennies we can pack away. While deducting kayaks, climbing ropes, and quarter-dome tents from Uncle Sam’s cut isn’t possible for many of us, the U.S. government is beginning to understand — and incentivize — the importance of a healthy, active populace. When health care costs go down, quality of life goes up, and people generally become happier and more productive.
Enter the Renewable Energy Tax Credit legislation of 2008 and its provision, section 132(f) of the federal tax code (yes, it’s as exciting as it sounds!), affectionately known as the Bicycle Commuter Benefit. Learn to love that phrase, because it provides all W-2 employees the opportunity to receive $20 a month, tax-free, from their employers under the simple, and awesome, condition that they ride their bike “regularly… between [their] place of residence and place of employment.”
What Is The Bicycle Commuter Benefit?
The BCB provides employers the option to incentivize bike commuting among their employees by offering up to $20 per month for “reasonable expenses incurred.” This includes the purchase of a bike for commuting, repair costs, U-locks, lights, helmets, etc. This money is available tax-free up to $240 per year – that’s basically half the cost of a decent commuter bike!
Am I Eligible?
As long as you are not a sole proprietor, independent contractor, partner, and/or two-percent (or greater) shareholder of an S-type corporation, you are eligible.
How Do I Get Started?
Talk to your employer! In many cases, this benefit is either not yet in place or it is not known by employers. The good news is that it is as much in an employer’s interest as it is the employees’. Employers receive a tax deduction for the contribution and save compared to providing the same benefit as a raise through gross income. As an employee, all you need to do is ride at least three times per week as a full-time employee (or similar proportion for part-time). Employers can handle the reimbursement in-house or contract the benefit through an outside handler (the League of American Bicyclists features Commuter Benefit Solutions).
What Kinds Of Forms Are Needed To Begin And/Or Enroll?
Absolutely none. So long as the benefits offered do not exceed $20/month and $240/year, the IRS does not require any forms to be submitted by employees or employers.
I Don’t Believe You – Where Can I Get More Information?
Really? The League of American Bicyclists has a handy rundown of the law, Best Workplaces.org offers a comprehensive PDF, the IRS has a wonderfully dry explanation, and the National Center for Transit Research created this nifty summary.
Talk to your employer, ride your bike, get paid. Period. Let us know if you currently receive or offer this benefit — help spread the word!