The $700 billion financial services bailout bill passed in October extended its reach from banks to two wheeled commuters. A new employer tax benefit for bicycle commuters was tucked into the complex legislation. Effective January 1, 2009 employers can opt to provide a monthly reimbursement of up to $20 for expenses incurred by employees who cycle to work.
The legislation leaves room for interpretation about eligibility. It defines a “qualified bicycle commuting month” as one when an employee, “regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment.” While ‘regularly uses’ and ‘substantial portion’ are not clear the list of reimbursable expenses is very specific. It includes, “…purchase of a bicycle and bicycle improvements, repair and storage.”
This benefit is designed to be non taxable, providing a break for both employers and employees. The $20 per month maximum and employer tax savings make the benefit more affordable even in the unlikely event that all employees opt to receive a bicycle commuting reimbursement. This modest expenditure certainly sends a message that reinforces healthy and green habits. The $20 may also offset 2009 increases in employee contributions to health benefits.
Employees can receive the benefit for individual months; it does not have to be an entire year, but they cannot be paid the bicycle commuting benefit and any other qualified transportation benefits within the same month. The employee who rides their bike to the train won’t be reimbursed for bike expenses and train tickets. The League of American Bicyclists has an easy to understand introduction to the legislation.
If you are already providing any kind of transportation benefits your provider should be able to help with set up and administration. A new plan should not be complicated to set up; there is no requirement for a written plan document. Plan start dates can be any time during a year.
Even as gas prices decline any commuter reimbursement is a great way to help employees cope with increased costsin other areas. A January 1 start date can be the perfect way to accompany New Year’s resolutions, as long as your workplace is not in a snow belt. If flakes are flying a new plan can be introduced in the spring.