Thursday, October 30, 2008

Bicycle Commuter Tax Credit

The "bail-out bill" just passed by Congress and signed into law by President Bush includes a provision that may provide cyclists who ride to work up to $240 to offset their commuting cost and hopefully encourage more bicycle commuting.

The bill offers employers a $20 per month per eligible employee tax credit to cover reimbursement expenses related to the needs of commuter bicyclists. As worded, almost anything related to bicycle commuting could be covered.

This tax credit is only for employers, so you have to convince your employer to set up a program to make it work. You submit your receipt for bicycle expenses to your company and they reimburse you for the cost in your paycheck. At the end of the year your company claims a tax credit for the amount they've reimbursed employees.

Ryan Cooper, a member of Knoxville Regional Bicycle Program Bicycle Advisory Committee, has drafted a sample letter that you can use as a starting point for contacting your Human Resources Department to ask them to implement such a program.


Human Resources Department,

As I'm sure you are aware, the Congress just passed H.R. 1424 "The Bail-Out Bill" on Capitol Hill. Although this legislation deals primarily with the housing market, there were several other
unrelated provisions added to the bill. Among these was a tax incentive for employers who promote the use of bicycles for commuting. The specifics of this tax break are laid out in Sec. 211, "Transportation fringe benefit to bicycle commuters" under the Transportation and Domestic Fuel Security Provision section but the change is pretty basic.

The bill offers a $20 a month tax relief per bicycle commuting employee to cover the cost of any employer reimbursement for reasonable expenses incurred by the employee "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."

I am interested in finding a way that [Company Name] could implement a program that would allow employees who cyclo-commute to expense less than $20 a month in bike related expenses. The benefits of an expense reimbursement program for cyclo-commuters include:

Lower fuel costs on company owned vehicles
Less required maintenance on company owned vehicles
Ability of [Company Name] to claim a full $20 per month per eligible
Employee when actual expenses are likely to be far less
Improved employee health which in turn increases employee productivity
Creates a progressive and environmentally conscious image for the company

Please let me know if you have any questions or would like additional information about this recent tax code change.

Thank you,

[Your name]
[Your job title]