The fiscal cliff tax discussion is complex but there is one relatively simple matter that can be addressed in the next few months: improving the little known commuter bike tax benefit. Buried deep in the Emergency Economic Stabilization Act passed by Congress in 2008, is a benefit for those who commute to work by bike. Bike commuters are eligible to receive up to $20/month (or $240/year) from their employers for “reasonable expenses made by the employee…for the purchase of a bicycle and bicycle improvement, repair, and storage.” Known as the Qualified Bicycle Commuting Reimbursement (QBCR), the bike tax benefit is covered in section 132(f) of the IRS code. While bike commuters receive a tax benefit, employers can see savings too by reducing their FICA (e.g. Social Security and Medicare) taxes.
However, the bike tax benefit comes with two key limitations. Unlike other commuter tax benefits for parking and transit, the bicycle provision cannot be funded through employee pre-tax income, nor can it be used in conjunction with other commuter tax benefits in the same month. So, if you use your bike to commute to the train station, and you already receive a transit commuter tax benefit, you cannot take advantage of the bike tax benefit.
Congressman Earl Blumenauer of Oregon proposed the Commuter Relief Act in May 2011 to remedy these limitations. Although the bill didn’t pass last session, there is an opportunity now in the tax discussion to revisit, and improve, the bike tax benefit. Blumenauer’s bill would increase bike benefits from $20/month to $40/month, and allow bike commuters to combine the bike benefit with other commuter benefits, up to $200/month. This legislation also seeks to cap all commuter benefits at $200/month and allows self-employed individuals to be eligible to receive transit tax breaks. Lastly, the Commuter Relief Act would reduce the parking benefit from $240/month to $200/month and bump up the transit benefit from $125/month to $200/month.
The Commuter Relief Act offers attractive incentives for those biking to work as well as those considering it. As Congress takes up reforming taxes in the coming months, they should also revisit this bill.
[…] Fiscal Cliff Tax Overhaul Should Include Blumenauer’s Commuter Tax Reform (Mobilizing the Region) […]
[…] TSTC: Federal Tax Discussion Should Include Bike Commuter Benefit Email Share /* A project of OpenPlans /* */ var addthis_config = { ui_click: true, ui_cobrand: 'Streetsblog', data_ga_property: 'UA-6717081-8', data_ga_social : true }; var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-6717081-8']); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-6717081-12']); _gaq.push(['_setDomainName', 'none']); _gaq.push(['_setAllowLinker', true]); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); […]
Can you clarify whether it includes the cost of bike parking? Your article seems to suggest it does not. That would be quite ironic: Up to $200 for auto parking, but not covering the cost of bike parking at a transit station.
There is another limitation to the current bike subsidy law; it offers nothing for public employers. I work for the State of California and the state refuses to implement this law. It wouldn’t cost the state much, but they would have to spend something to administer it and the corresponding state income tax that I pay would be slightly reduced. I would welcome sharing my frustrating experience with this law with sympathetic legislators.
[…] example, a commuter cannot take the bicycling reimbursement and commuter tax credit together. This doesn’t seem fair, given […]
[…] tax code concerns the $20/month benefit for bicycle commuting costs. Currently, the benefit cannot be combined with other commuting benefits. For example, someone who bikes to a rail station and takes the […]
[…] for a more multi-modal successor to MAP-21, and if tax reform is on the agenda, Congress could fix the federal commuting benefit so that transit and parking tax deductions are back on equal footing, and the bike benefit is more […]