Month: December 2008 Page 6 of 9

The Chicago Tribune takes a look at the new cycling commuter tax benefit:

The bike commuter benefit is scheduled to go into effect Jan. 1, but one of the main problems is few companies are ready to implement it. Several say they don’t even know how it would work, and they need guidance from the Internal Revenue Service, which is unlikely to arrive before year-end.

That’s to be expected, really, as it was only passed in October (it was part of the bailout bill – tho’ it’s worth noting that easy passage was expected, independently).   What, exactly, is the benefit to cycling commuters?

Here is what the legislation spells out: Commuters can receive $20 in reimbursement for any month during which an employee “regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment.”

Reimbursable expenses include buying a bike, bike improvements or repair and storage.

Seems pretty straightforward to me.  The author tries to make an issue out of some confusion about how to administer the benefit, but it’s the same story with any tax benefit.   He does hit on a real problem, however:

Commuters who use the bike benefit can’t be participants in other transit benefit programs, including those that reimburse for parking, train tickets and subway and bus passes.

Those programs allow commuters to use as much as $120 a month in 2009 pretax dollars to pay their expenses, saving someone in the 28 percent tax bracket about $34 a month. In contrast, allocating $20 in pretax dollars to biking produces a tax savings of $5.60 a month.

Some local commuters ride to a train stop and make the second part of their trip on Metra. If they can select only one transit program, they are likely to choose the train benefit.

If the purpose of the tax benefit is to encourage commuting by bike, this certainly works against that purpose.  Then again, the tax benefit I could get for parking at my old office downtown was about triple what I got for using Metro, and I was never tempted in the least to drive.  In any event, if you bike to work, ask your human resources people about it, even if you don’t expect to use it:

If the cycling commuter benefit is to become standard in corporate America, Clarke believes employees will have to be the force behind the change, calling and e-mailing the human resources department to indicate their interest.

Ride safely.

(Via Hugh Bartling)