Bicycle Bailout

I got an email from a reader noting that there’s word “making its way around bike lists” that the financial rescue package included “transportation fringe benefit to bicycle commuters” and asking if it’s true. It is indeed true. For both procedural reasons and for crass political reasons, the $700 billion package wound up attached to a mental health parity bill that also included a lot of minor tax provisions. What you need to do is get the capitalization right. There’s a provision of existing tax law called the “Transportation Fringe Benefit.” Employers can offer the Transportation Fringe Benefit to their employees. It allows employees to receive a tax-exempt benefit of up to $215 per month for drivers participating in qualified parking plans or $110 per month for those who use transit or vanpooling.

Rep. Earl Blumenauer represents Portland — the bike commuting capital of the United States — and was formerly Portland’s Transportation Commissioner. He introduced the Bike Commuter Act last year that would amend section 132(f) of the IRS code of 1986 to include “bicylces” in the definition of transportation covered by the qualified transportation fringe benefit.


His Act was incorporated into the bailout package and signed into law. Since the mechanism of the subsidy here runs through your employer, it’s possible (like, I would say) that many employers won’t realize this change has been implemented starting next year so people may need to show some initiative to actually get their new bike Fringe Benefit. I’ll try to stay abreast of this issue and let folks know what they need to do.

Meanwhile, though I certainly support doling out commuting subsidies in an equitable manner, this is one of those situations where really I think we’d be better off just eliminating the whole loophole. After all, should the commuter tax benefit really discriminate against pedestrians? Against self-employed people? Against people staying home to take care of their kids? It’s hard to draw principled lines with this kind of thing and it would be better to just eliminate tax breaks and lower overall rates.