Bike Commuter Benefit
Federal Law Provides Tax Incentive to Cycle to Work
The Federal Bike Commuter Benefit became effective Jan. 1, 2009 and bike commuters across the nation are able to receive a pre-tax amount for riding to work. The Bike Commuter Benefit is real and in effect- but, there are some restrictions and confusion that this page will hopefully clear up.
Unlike other pre-tax benefits for transit and parking and van-pools, the Bike Benefit is only being offered as an employer-paid benefit. This means that if your employer elects to offer this benefit, you can receive up to a bonus of $20 a month for each month you commute primarily by bike from your employer tax-free. Unlike the other Transportation Benefits (for transit, van-pools, or parking), this is paid for by your employer -- not by you, the employee.
Also, currently, if you accept the Bike Commuter Benefit, you are not allowed to accept any other Transportation Benefit. This was a major oversight in Congress, and there have been a variety of bills to fix it, but at the time of this writing (July, 2013), this omission is still in place.
Many employers contract with a Commuter Benefit Provider to coordinate other transportation benefit programs, so have your benefit coordinator call the provider to request enrollment in the bike benefit program. The San Francisco ordinance that requires businesses with 20 or more employees to provide transit benefits does not apply to the bike benefit, as it is an employer-paid program.
While the San Francisco Bicycle Coalition hopes employers will choose to support their biking employees, we understand the difficulties of providing an additional $20 per month over a person's salary could cause. We will continue to work with our national partners to correct these issues and, hopefully, make it easier for employers to provide this great benefit.
How to get the bike benefit at your work:
How to qualify for the benefit:
For more info:
Benefits to Employees
Benefits to Employers
Do Employers Have to Offer this Program? The federal Commuter Tax Benefit Program itself is not mandatory. However, the San Francisco Board of Supervisors passed the most far-reaching transit benefit requirement ordinance in the country. Ordinance 199-08 (PDF) authored by Sup. Ross Mirkarimi, requires employers with 20 or more employees to offer their employees transit benefits. As of January 19, 2009 employers who fail to do so will face fines of up to $800. Implementing the federal Commuter Tax Benefit Program is one way in which San Francisco employers can comply with this new city ordinance. The SF Department of Environment has more information on implementation of the San Francisco Ordinance.
How Does the Bicycle Commuter Tax Benefit Work?
Option 1: Employee-Paid Pre-tax Benefit Option
The company does not have to write a plan document or obtain IRS approval, so there is little paperwork. There are no irrevocable elections or forms. A pre-tax program can be started any time of the year, or enrollment can be limited to certain times of the year. The League of American Bicyclists and the SFBC is working with Commuter Benefit Providers to add the bicycle benefit to their existing commuter portfolio.
Accor Services is the only Commuter Benefit Provider the SFBC is aware of that currently offers a Bicycling voucher for all purchases allowed by the federal program. This voucher can be used at any bicycle shop. Employers purchase the vouchers in advance, and are responsible for distributing them to their employees participating in the program.
Option 2: Cash Reimbursement
The key point to consider in setting up a cash reimbursement program is that there is a required mechanism for the employee to certify that they will commute to work by bike a substantial portion of the month (that could 60% of the time as an example). Additionally, that there is a bona fide reimbursement arrangement whereby the employee provides receipts for covered expenses incurred such as, bike maintenance, commuting gear, parking facilities, changing or shower facilities etc.