Walking and Biking

Offer Federal Bike Benefits to Employees

What Is It?

Employees regularly using a non-motorized bicycle for a substantial (50% or greater) portion of travel between the employee’s residence and the workplace can receive assistance defraying some of the costs a bike commuter may incur. These costs may include the purchase of a commuter bicycle, commuting gear (helmet, gloves), bike lock, bike parking/storage, bike upgrades (lights, racks), repairs and general maintenance. These are considered reasonable expenses as long as the bicycle and equipment is regularly used for travel between the employee’s residence and place of employment.

Benefits

Qualified transportation fringe benefits allow employers to save money on payroll taxes and employees to save money on federal income taxes (National Center for Transit Research). This is a financial benefit to employees, but also works as a way for employers to recognize positive choices made by employees and to show that the business is bicycle (and environmentally) friendly. 

Drawbacks

Although benefits are not subject to federal income taxes, they may be subject to state taxes.

Employees applying for the bicycle commuter subsidy are ineligible for other transportation benefits (transportation in a commuter highway vehicle, transit pass or qualified parking benefits) during the months they receive funds for bicycle commuting (National Center for Transit Research).

Regulatory Impacts and Requirements

Qualified transportation fringe benefits are regulated by Section 132(f) of the Internal Revenue Code (National Center for Transit Research).

Financing Options, Incentives, and Rebates

Employers can reimburse employees up to $20/month for qualified bicycle commuting. This be distributed in a method chosen by the employer, but options include payroll additions, reimbursement checks or checks to bike shops.

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