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The Federal Bike Commuter Benefit Tax Credit Explained

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Do you commute to work on your bike? Have you thought about doing so?

If so, you may soon be eligible for Federal Bike Commuter Benefit.

But what is it, and how could it help you?

Here’s a breakdown of what you need to know.

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Quick Answer: What Is The Bicycle Commuter Benefit?

The Federal Bike Commuter Benefit is part of President Biden’s “Build Back Better” Bill, the fate of which is yet unknown as of January 2022. The benefit would allow employers to offer employees up to $81 in pre-tax bike commuting benefits per month.

It was over a year ago, on January 3, 2021, that the Build Back Better (BBB) Bill was introduced in the 117th Congress by US Representative Earl Blumenauer.

The Build Back Better Bill was passed by the US House of Representatives on November 19, 2021. But progress shuddered to a halt in December 2021 when Senator Joe Manchin withdrew his support for it due to concerns about the cost.

President Biden still hopes to pass parts of the $1.85 trillion bill into law by offering a pared-down version of it. This would salvage the climate-change measures that would seem to include the Federal Bike Commuter Benefit.

Video: What’s next for President Biden’s BBB bill?

The Long Answer

The proposed benefit seeks to repeal the suspension of bike commuter benefits that occurred under President Trump in 2017. Not only that, but it substantially enhances the $20 per month benefit that was available before that.

Now that you know what the Federal Bike Commuter Benefit is and where we stand with it, let’s flesh out some of the detail. How would it be offered to you, the bike commuter?

How You Might Receive The Benefit

An employer is likely to have options as to how this benefit is paid. It may come from the employee’s gross salary. The advantage of this for employees is they pay for their commuting costs with pre-tax dollars, which bumps up their net wage.

Another way the $81 (max) may be offered is in the form of an employer-paid subsidy. In other words, it would be a benefit paid on top of normal wages.

A third possibility is a combination of a subsidized $81 benefit funded partly by the employer and partly by the employee’s pre-tax compensation. Bear in mind that employers also gain from the benefit by a reduction in payroll tax.

Commuting Benefits may also be paid in the form of vouchers. This could include vouchers exchangeable at participating bike shops for maintenance.

Video: Understanding Pre-Tax Commuter Benefits

Who Qualifies?

This is a question that is yet to be answered, except to say you must be a “regular” bike commuter. You might assume this means at least once or twice a month, but it could very easily mean two or three times per week.

A disappointing aspect of the commuter benefit is non-employees do not qualify. Hence, workers who are contractors, outside consultants or freelancers, all miss out. You have to be on the company payroll to qualify.

Combining Benefits

A key feature of the proposed Federal Bike Commuter Benefit is that bike commuters can still receive transit and parking benefits for other modes of transport. Each of these has a $270 limit, meaning you can claim up to $540 monthly for them.

The above pre-tax benefits have the same desirable effect on take-home income as the proposed Federal Bike Commuter Benefit. If the latter becomes law, you’d be able to mix and match them if you are an intermodal commuter.

What Is Included?

A notable part of the Federal Bike Commuter Benefit is its inclusion of bike-share fees. In fact, you wouldn’t even need to own a bike to claim the proposed benefit.

Automatic membership of a bike-share scheme is one way the benefit may come from employers.

If you do use your own bike to commute, any maintenance expense is likely to be covered by the benefit. That could mean mechanical repairs by your local bike shop or replacement of consumable parts like tires and chains.

Also covered by the proposed Federal Bike Commuter Benefit are e-bikes with a maximum 750W motor. The same BBB bill intends to offer Americans a refundable tax credit This would knock 30% off the cost of a new e-bike (capped at $1,500).

Wider Benefits

Of course, the Federal Bike Commuter Benefit has far-reaching consequences that affect the “bigger picture” as well as our collective pockets.

In encouraging people to use growing cycling infrastructure around the world, we help to address urgent global problems. These include climate change, congestion in big cities, and healthcare burdens created by unhealthy lifestyles.

Video: 5 Reasons To Start Bike Commuting

Conclusion

Bike commuting makes so much sense as a way of helping with urgent environmental and health issues. Even without a pandemic, shifting demographics demand healthcare reforms across the world.

We can help, meanwhile, by looking after our own health by riding bikes.

US bike commuters can only hope the Federal Bike Commuter Benefit soon passes into law, wrapped in a repackaged BBB bill. Although the $81 limit is modest compared to transit and parking benefits, it’s an incentive that moves us in the right direction.

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Glenn H
Glenn H
When I’m not contributing articles to Bike Push, I can often be found cycling on the rural roads around me. If I can help you benefit from bicycling in some small way, I’ll consider it a win.

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