We have talked in this column several times this year about Bicycle Commuting. High gasoline prices combined with the worsening economy has led many of us to at least think about Bicycle Commuting. Some of you have already begun, and some who were already doing it have increased your dedication.
I have learned that the recent Wall Street Bailout bill included some good news for some bicycle commuters, who will be eligible for a tax break as part of the new legislation
Bicycle commuting tax breaks were tacked onto the bailout bill in some very complicated Washington political activity. that I’m not sure I completely understand.. I do understand that the new legislation goes into effect on January 1, 2009. It will involve employers.
Employees who receive a bicycle commuting fringe benefit on the pay stubs will find that up to $20 a month, or $240 a year, will no longer be considered income. In fact, companies that provide employees a commuting benefit will leave this amount off paychecks.
Andy Clarke, president of the League of American Cyclists, said that “We really view this bill as a foot in the door to provide bicycle commuters with the same tax relief employees using public transportation or incurring parking costs receive”.
Employers have to declare any fringe benefit they provide employees as employee income. Many companies are providing bicycle commuting benefits to employees, but employers and employees must report this money as taxable income.
This new legislation will now allow employer fringe benefits of up to $20 a month to bicycle commuting employees as a qualified transportation fringe benefit under tax law.
Many companies already offer bicycle commuter benefits. Now that some of this money is tax free, or not considered as employee income, let’s all hope that this legislations will encourage bicycle commuting as well as new and expanded programs.
Employers can continue deducting the $20 a month as a business expense and they currently do. And although the exemption is not much, it’s probably enough to help an employee buy a commuter bike, or to purchase other necessary bicycle commuting items like fenders, basket, lights, bike repair and storage fees.