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Tax Benefits for Bicycle Commuters

January 25, 2012

The deductibility of commuting expenses for bicyclists should be increased, according to a recently released academic paper.

The paper, by Jennifer L. Schoulberg, of the St. Louis University School of Law, argues that there is an inequity between commuting expenses for automobile drivers and bicyclists, especially in terms of parking expenses. The paper was recently linked to on the TaxProf blog.

The paper notes that the financial bailout legislation passed in late 2008 included the first tax break ever for bicycle commuters. Section 211 of the Tax Code was extended to apply to bicyclists, making reimbursements from employers to employees for expenses incurred in commuting from home to work by bicycle nontaxable. Those include reimbursements for purchasing, maintaining and storing bikes.

However, Schoulberg points out that the maximum excludable nontaxable reimbursement is $20 a month, and for many bicyclists, that does not cover all of their expenses, especially when the average cost of a bicycle was $500 back in 2009, according to the National Bicycle Dealers Association.

Bicyclists are also concerned that employees are not allowed to concurrently receive nontaxable reimbursements for both their bicycle commuting expenses and other commuting expenses such as for using mass transit or car pooling. On the other hand, there are generous tax breaks available for car drivers in areas such as parking expenses.

In 2009, Rep. Earl Blumenauer, D-Ore., proposed a bill called the Green Routes to Work Act, which would expand the tax benefits available to bike commuters. Blumenauer, not coincidentally, happens to be the founder of the Congressional Bicycle Caucus.

But Schoulberg notes that the Blumenauer bill still has some flaws, as it would not increase the maximum amount of nontaxable reimbursements for bicycle commuting expenses, nor allow employees to receive nontaxable reimbursements of expenses for both bicycle commuting and carpooling. However, the Blumenauer bill would give bicyclists the ability to receive nontaxable reimbursements for both bicycling and mass transit expenses.

One way or another, it’s a start.

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