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Commuter tax benefit

by Richard Masoner

Bicycle Commuter Benefit on House Tax Extender Bill

On May 21, 2008, prior to the Memorial Day recess, the House passed H.R. 6049, the “Renewable Energy and Job Creation Act of 2008.” Included in the legislation is a $20 per month transportation fringe benefit for bicycle commuters to cover costs of commuting by bike.

The Senate House finance committee is expected to take up this measure the week of June 2nd. The League of American Bicyclists is asking people to contact Senators who previously co-sponsored S. 858 (Bicycle Commuters Benefit Act 2007) to sign onto a joint letter, being distributed by Senator Wyden, to the Chair and Ranking Member of the Finance Committee asking them to adopt the House provision.

Please take a moment to click this action link to contact your Senator and urge them to sign onto the joint letter.

 
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28 Responses to “Commuter tax benefit”

  1. john t says:

    Biking to work just keeps on paying dividends, doesn’t it! I will never stop!

  2. scott says:

    maybe i’m missing something … do all people who commute get the $20/month then? also, there was a 2007 one? did that one pass?

  3. Fritz says:

    The 2007 version passed in the House version but not the Senate version of the Energy Act, and the bicycling provision was eventually removed in compromise version that was eventually passed by both houses. Some type of bike commuter provision has been introduced by somebody in Congress every year for at least the last five years or so.

    For the 2008 version introduced by Rep Rangel, the benefit comes in the form of a reimbursement for expenses “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.”

  4. Ron Georg says:

    Howdy–

    I’ve always figured the best way to begin a negotiation is with your greatest demand–so what’s with the paltry $20?

    Ranchers who use soil conservation measures can apply for–and receive–money for carbon credits based on the carbon they sequester in the soil through conservation practices. It doesn’t matter if they’ve always done it that way, they can still get the credit.

    So where’s my carbon credit? The benefit to our society of bicycle commuting goes well beyond my consumer purchasing power. Please note I said the benefit to society, not the benefit to the economy.

    That’s because our economy is only designed to measure consumption. Burn up more gas, and that goes down in the plus category for the GDP. Stop burning gas, and you get no credit.

    The $20 a month only measures costs, it doesn’t attempt to account for the benefit we as bicycle commuters provide. We reduce all kinds of social costs, from health care to road maintenance, and even fuel prices could go down if we can reduce demand (that’s assuming supply and demand actually applies here–there are probably some shadier forces manipulating that market).

    The meek don’t inherit squat. We need a big, booming voice to demand that beneficial activities such as bike commuting be supported and encouraged. A cyclist should get every cent of milage credit a driver gets, and then some.

    Being self-employed, I can end up paying nearly 25 percent of my income in taxes, despite hovering around the poverty level. Any expenses I can write off are useful. I haven’t done the math, but I believe I would be better off financially if I used a car for work.

    Of course, I’d be worse off by most every other measure, so I’ll keep riding.
    Happy Trails,
    Ron Georg
    Moab

  5. I really like the steps that the government is taking to increase the benifits to bike commuters.

    Living an hour (driving distance) away from my office makes it impossible from my end…I wish I could though!

    The is my first time on this blog on your network…great job!

    -198

  6. Alan says:

    Rob,
    Don’t give up before even starting.
    It’s possible to ride and use transit. I live an hour from work (23 miles). I ride the first 13 and take a bus the rest of the way. Occasionally, I even ride the entire way.

    Look up bus schedules on the route and see what’s available. For every gallon of gas you save, that’s 20 pounds of CO2 (and other icky stuff) that you are not putting into the air.

    (And yes, there are tax breaks for transit users too).

  7. Alan,

    Man I wish! Getting from the north side of Atlanta to the South side is tricky even by car. Unfortunately, we do not have a very well established public transit system in our area.

    What I need is a way to work from home! Maybe the blogging thing will work out over time…

  8. vegancommuter says:

    So how will one prove that they do indeed commute by bike to work? Or does it just involve showing a purchase receipt of a bicycle?

  9. Fritz says:

    Vegan, to be honest the current system of tax free transit benefits is wide open to fraud and abuse. Commuter Checks, for example, are often advertised on Craigslist for about 90% of their face value. That’s free money for the person who gets them for free from his employer. I’ve even seen VTA EcoPass for sale on Craigslist for free — those are worth over $600.

    Recent research by the US Department of Transportation Office of the Inspector General shows that transit benefit fraud by federal government employees has *never* been prosecuted. It’s a low risk, moderate reward activity.

  10. Mark B. says:

    I can’t speak for the rest of the working stiffs, but my employer — my direct supervisor, also — not only know that I commute to work by bike EVERY DAY, but that I am car-free. In addition, with the knowledge and consent of my employer, my bike comes in the building every day.

    I will be surprised, nevertheless, if the $20 materializes — I work for the biggest retailer in the world, and they are notoriously miserly when it comes to us, the worker bees. It will be, for me, $20 I didn’t have the minute before, so I’d take it and run! (or ride, as he case may be)

  11. Jim says:

    I just stumbled upon this blog, I think this is a great start!

    I started bike commuting this past may and have maybe driven my car 5 time total since then. We all need to push actions like this through – at work, local community and federal.

    I will be following this closely and using this benefit next tax season.

  12. Fritz says:

    Hi Jim, and thanks for stopping by. The Senate’s version of the bill didn’t contain the bicycle commuter benefit, and that provision was eventually dropped by the Conference Committee that worked to reconcile differences in the House and Senate versions of the bill.

  13. JD says:

    How do we find out who voted against it so we can vote them out next election?

  14. John Paul Hudson says:

    What I want to know about this addition to the 700 billion bail out. The Bike bill did pass. Now how exactly do we get the 20 dollars a month and who do we send the bill to for my Schwinn continental electric assist bike that costs around 2,300 now I paid 2,130 with tax. Commuter bags water bottle lights extra. Do we have to convince my emploier to get the money from the government?

  15. John Paul Hudson says:

    I live in south West Fort Worth Texas. Better Commuting than most cyclists think. Nice rodes bike ways and dedicated bike paths. My routes I ride more direct route to work mostly down hill 31 minutes 10 miles. No shower facilitys at the old Nissan Dealership (no sweat). Sweat hard and ride home longer but less grade up hill approx 12 miles 40 to 45 minutes. Being 53 years old I really like the Electric motor assist of my Schwinn Continental. Almost totally slient I catch road racer spandex types and pass on my 40# machine with pannier bags laptop phone and change of clothes. Sometime I don’t tell them. Riding away from traffic is critical less exhaust and people really are not watching for bikes anyway. THE ELECTRIC WHEELMAN

  16. I am the biking librarian at Nashville State Community College. I love going by bike. I’m 24 miles from home to work. I usually ride the first 1 1/2 miles to the train station, then put my bike on the train ride the train to downtown Nashville, and then ride my bike the last 7 miles. I’m 53 and I do it for the health benefits as well as to help reduce my carbon footprint (and also because it is fun). I’m also trying to teach my teenage son that you do not need a car to go everywhere.

    The tax benefit sounds great. I was wondering if I would qualify since I use a train for part of the trip.

  17. John Paul Hudson says:

    Tax benefit for commuting has to be set up thru your emploier and they receive a benifit for your cycling and you acn also get some money for your cycle cycle clothing and pedals shoes Pannier bags I am going to go for all I can get. jp.hudson@sbcglobal.net I will try to find out what forms need to be filled out and government regulations

  18. Bill N says:

    “Pork” in bailout bill includes bicycle commuter Tax

    by Nessie at 05:20PM (PDT)
    Update: Bailout bill passes House with Bicycle Commuter TAX attached

    Provisions of the long-sought Bicycle Commuter TAX are included in the $700 billion financial bailout bill passed by the Senate on Wednesday night.

    The bicycle commuter measure provides a tax to employers who offer cash reimbursements to employees who ride their bicycles to work. It was pigeonholed after it was first introduced in 2005, and Rep. Earl Blumenauer of Portland and Senator Ron Wyden of Oregon reintroduced it in 2007.

    It appeared dead in the water again this fall, until it suddenly appeared in the Senate version of the bailout bill along with other tax breaks worth $108 billion for businesses and families.

    The bicycle commuter act is small in comparison to the other “sweeteners” as it’s estimated to cost $10 million. It was probably added to the new version to make the bailout more palatable to Blumenauer, who voted against the original bailout on Monday.

    The House of Representatives, which originally defeated the bailout package, is expected to vote on the Senate version on Friday.

    Common sense

    The group Taxpayers for Common Sense was one of the first to catch sight of the bicycle commuter tax. It’s listed under Section 247 of the bailout bill. The taxpayer group summarized it:

    Sec. 211 — Transportation Fringe Tax to Bicycle Commuters

    Allows employers to provide an extra tax to employees for costs associated with bicycle commuting, including purchase and repair of a bicycle, bicycle improvements, and bicycle storage. Earl Blumenauer (D-OR). This provision is estimated to cost $10 million to bicyclists

    News sources are reporting that many House members who voted against the original bailout may be more willing to vote in favor of the Senate version with its added tax on bicycles. It could attract up to 100 GOP votes.

    Fiscally conservative Democrats in the House are angry about the new bill because they have argued for months that the tax breaks should not be extended at the expense of increasing the federal deficit.

    The squeeze

    Looking at the votes, you have to wonder if someone added the Bicycle Commuter Tax provision just to be fair to everyone else

    The Portland Democrat voted against this version of the bailout bill. Now he’ll be faced with a financial bailout bill that just happens to include his pet project.

    “Knowing what I know now in terms of our economic situation and with this bill in its current form, absent some dramatic change in circumstances, I have no plans to support the bailout legislation. I continue to think that we need more protections for taxpayer and bankruptcy fairness which will do more to stop the free fall than anything else.” and the bicycle community has skirted paying it’s fair share for decades now. It’s time to make things right. time to start collecting some of our past due Tax money. Earl Blumenauer (D-OR).

  19. John Paul Hudson says:

    I am sorry about my 40% loss of investments and retirement 401k. The passing of the Bike Bill is the only little bit light I can cling to. Wall Street is so far from my bike route, but the effects of this boondoggle will be felt for years. Resession Depression “Fear of fear it self”. I know one thing a good indian summer bike ride to work really makes me feel much better.
    Please could some one experenced with the company tax benefits tell us what we need to do and what questions too ask. Many of us emoploys don’t know how to get in on this tax break. I have modified one Bicycle and purchased another commuter specific bike for riding to work this year. I am sure H&R block won’t know how to make this happen.

  20. Nathan Broom says:

    Here’s a link to some more information about the credit. Looks like it will become applicable January 1, 2009. http://blog.centurycycles.com/2008/10/tax-breaks-for-bicycle-commuters-added.html

  21. John Paul Hudson says:

    Thank You Nathan Broom! Now how to make your boss and prsonel department think it was there idea?

  22. Nathan Broom says:

    I’m still trying to get to the bottom of this, but I think the bottom line is this: the new law amends IRS code (section 132f) to let employers allow their employees to set aside up to $20 of their pay monthly for qualified reimbursement of bike commuting expenses. Think of it like a Health Savings Account for bike commuting. I don’t believe there is any federal reimbursement to either the employer or employee for the $20. The impact of this is that if you and your employer are both willing to go through the trouble of a reimbursement plan, you can avoid paying income tax (and I believe the employer can avoid payroll tax) on up to $240 per year, if you bike commute regularly every month. A generous employer could presumably give cyclists an extra $20/month tax free, in the same way some employers contribute to an HSA on behalf of employees.

    It’s a nice gesture, but I don’t expect it will benefit many bike commuters. Here’s a link to a benefits consulting company that provides information to employers who want to offer the benefit to employees. http://www.coredocuments.com/core132.php

    The new provision amends current language that allows employers to offer pre-tax reimbursement for public transit ($115/month) and qualified parking ($220/month) expenses. Employers who are already offering this benefit should find it pretty easy, come 2009, to add the bike commuting benefit. But bike commuters who are currently receiving pre-tax reimbursement for transit passes will have to decide between transit and bike reimbursement.

    That’s how I understand this so far, though I’m still looking into it.

  23. Fritz says:

    I really need to get that FAQ about this up…

    Nathan, you’re mostly spot on. A couple of minor points:

    1. The cafeteria plans are regulated under IRC Section 125, while the transportation benefits (transit, parking and — soon — bikes) are under 132. This means no paperwork and no oversight unlike Section 125 benefits, and there’s no “use it or lose it” provision.

    2. Employers may elect to take this from the paycheck or provide it on top of the regular salary as an additional fringe benefit. Every employer I’ve had that provides Section 132 benefits does it as an an additional benefit.

  24. Bike2Work says:

    The benefits of bicycle commuting are extinguished by the burden of non-detecting traffic signals and costly vehicle fines from police departments preying on bicyclists. An example is the city of Newport Beach in Southern California. Not being contiguous to a major freeway, Newport Beach is light traffic and family-oriented with car drivers being bicycle-friendly. But city engineers have set back a frequently-cycled left-turn signal to not detect bicyclists; police motorcycles chase bicycles to create pseudo-vehicle citations; and the police commanding officers classify bicycles as vehicles while advocating bicyclists to be pedestrians and use crosswalks. The scenario is city hall enabling the police department to prey on bicyclists for vehicle citation revenue. Both Newport Beach City Hall and the Newport Beach Police Department (NBPD) defy California state law AB-1581 that requires traffic-activated signals to detect bicycles upon first placement or replacement.

  25. John Paul Hudson says:

    Merry Christmas Everyone Let’s all have a safe ride next Year. I hope we all get what we want next year Tax benefits. I hope I set a good example to our motoring friends. Get Out And Ride. I will write more on how my companys HR department deals with the Tax benefit. John Paul

  26. Fritz says:

    Looking forward to that, John Paul!

  27. DOUG M says:

    Happy New Year to all. I have biked to work for years now. It is about time the beaurcrats finally notice. It is just ashame the credit went from around $8o.00down to $20.00. They did that just so the bike commuter package would finally pass. As has been previoulsy said, What about all those other big breaks the vehicle people get? There is nothing better riding a bike for transportation. A wonder of things people miss every day by not riding a bike for any reason. Keep on Riding, Doug M

  28. John Paul Hudson says:

    Texas Monday 01/05/2009 32 degrees and freezing rain. Saurday it was over 80 degrees what a nice ride home! MY H.R. person almost never returns his e-mail. I hope they act on the Bike Commuter act soon.

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