The Bicycle Commuter Act of 2008
The message about the bicycle commuter credit has been lost in the morass of the Wall Street bailout and the related financial crisis, along with the mortgage meltdown, the Holidays, etc. But the essentials are these: Starting January 1, 2009, employers who provide bike parking, bathing facilities, tune-ups, or other support for bicycle commuting, can deduct up to $20 a month per participating employee from their own taxable income.
Section 211 of the "Emergency Economic Stabilization Act of 2008" allows for a "qualified bicycle commuting reimbursement" 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."
The $20 bike benefit compares rather poorly to the $115 mass-transit benefit already available, or the subsidies of up to $210/month aimed at helping those who drive to work and need parking.
The benefit -- up to $20 per month -- went into effect January 1, 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.
The bike provision was part of a larger Renewable Energy Tax Credit Initiatives legislation. it’s a simple, equitable provision that puts cyclists on the same footing as
people who get tax breaks for taking transit or driving (or parking, actually) their cars to and from work. The total anticipated cost of the provision, estimated by the Joint Committee on Taxation, is a very modest $1 million per year, as compared to the $4.4 billion annual cost of parking and transit benefits.
Basically, if your employer reimburses you up to $240 annually and does not give you a transit pass, qualified parking, or other transportation, then you can exclude the up to $240 from your gross income. It's tax-free to the employer in the sense that they can deduct that just like any other wage expense, but more importantly it's taken right off the top from taxable income as far as the taxpayer is concerned. But, it's all contingent upon an employer reimbursing for bicycle expenses.
Essentially, this law is a fringe benefit that will be administered through employers, much like the transportation fringe benefits for carpooling and vanpooling. The major difference is that those benefits can amount to $115 per month, and the bicycle benefits are only $20 per month.
The League of American Bicyclists is maintaining a Frequently Asked Questions page concerning the Bicycle Commuter Act.
The full text of the Emergency Economic Stabiliation Act of 2008 is here.