Bicycle commuter benefit tax exemptions

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Bicycle commuter benefit tax exemptions (commonly referred to as "bicycle commuter benefits") are policies that allow employers to provide a reimbursement to employees for the purposes of commuting to work by bicycle. Since 2009, the United States federal government has maintained a bicycle commuter benefit allowing employers to reimburse employees up to $20 per month exempt from the application of income taxes for reasonable bicycle commuting related expenses. Employers and employees find these tax exemptions favorable because there is no tax penalty on the transaction and employees are able receive untaxed reimbursements for bicycle helmets, locks, parking, general maintenance and other expenses. This policy does not preclude additional subsidies and benefits provided by lower levels of government, however there are currently no known policies adopted by governments below the federal level in the United States. [1]

CONCEPT


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Goals
Conceptual Example

A government sees a need or social to diversify the modes by which its commuters are travelling and wishes to increase the number of commuters travelling by bicycle. A country, state, province, county, or local government desires to encourage commuting by bicycle. In order to do so, the government provides a financial mechanism for employers to provide employees with a monetary incentive. The incentive may take one of many forms including but not limited to a tax-free reimbursement from employers to employees or funding mechanisms for employers to otherwise subsidize the costs of cycling for employees. As a result of implementing this policy, the cost of commuting by bicycle is decreased and the convenience of doing so is improved.

Tradeoffs

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Tradeoffs of implementing this policy may include:

  1. Increased bicycle congestion due to increased ridership.
  2. Increased injuries due to bicycle collisions, especially in places where there is not proper bicycle infrastructure.
  3. Minor loss of tax revenue due to tax exemptions.
  4. Difficult to enforce or verify bicycle ridership.
  5. Employers may be pressured to provide facilities such as bicycle parking and showers for employees.
Compatibility Assessment

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If answered yes, the following questions indicate superior conditions under which the policy is more likely to be appropriate:

  1. Is it feasible and safe for employees in the jurisdiction to commute to work by bicycle?
  2. Is it likely that employees would shift their transportation mode choice to bicycle with financial incentives?
  3. Would the amount of the tax exemption required to shift commuter behavior result in an acceptable level of lost revenue?
  4. Are employers willing to support cycling as commuting mode and pay for the reimbursements of their employees?
  5. Does the jurisdiction have the administrative capacity to process and enforce the tax exemption?
Design

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The following questions should be considered when determining how to implement this policy:

  1. What dollar amount of employee bicycle expense reimbursement will have a significant effect on employees switching their transportation mode to bicycling?
    1. This amount depends entirely on the jurisdiction and local conditions.
  2. What types of expense will be eligible for reimbursement?
    1. These expenses are at the discretion of legislators, but common expenses include helmets, locks, and bicycle maintenance costs.
    2. The decision to include the cost of bikesharing services is also at the discretion of the legislature.
  3. What is the maximum amount of tax revenue lost or spent on this program?
    1. The amount is a product of the number of people that use the exemption and the amount of the tax exempt reimbursement.
  4. Should tax exempt bicycle reimbursements be mutually exclusive with other tax exempt commuter benefits?
    1. This decision belongs to the legislators with consideration for the cost impacts of this decision.


ADOPTION


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PolicyGraphics
Adopters
  • Notable entities who have implemented or adopted this policy include:
    • Country of United States of America [1] - Provides tax-free reimbursement benefits of up to $20 per month per employee.
    • Country of United Kingdom [2] - Provides a tax-free reimbursement benefits for any amount up to one-thousand pounds before special permission is required.
    • Country of The Netherlands [3] - Provides a reimbursement for bicycle maintenance and reimburses commuters on a per kilometer traveled basis.
    • Country of Belgium [4] - Provides a reimbursement for bicycle maintenance and reimburses commuters on a per kilometer traveled basis.
    • Country of Germany [4] - Provides a reimbursement for bicycle maintenance and reimburses commuters on a per kilometer traveled basis.


STAKEHOLDERS


Supporters

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Opponents

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REFERENCES


Research

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Resources

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Footnotes
  1. 1.0 1.1 1.2 Bicycle Commuter Benefit. McLeod, Ken. The League of American Bicyclists. 2015.
  2. [1]. Moses, Stacey. The Blog of Bicycle Accessory Experts. 2010.
  3. [2]. Bartunek, Robert-Jan. Reuters. 2011.
  4. 4.0 4.1 [3]. Buehler, Ralph; Hamre, Andrea. 2014.
  5. Complete Streets Smart Growth America. 2016.
  6. WHY BIKES ARE A SUSTAINABLE WONDER. Sorensen, Eric. Sightline Institute. 2008.
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