National Ride Your Bike To Work Day Offers Chance To Lower Tax Bill

By Kelly Phillips Erb



It's National Ride Your Bike to Work Day!

Riding your bike to work has lots of benefits:

It's cheaper than driving (gas prices are out of control);
It helps keep you healthy (something that is increasingly important); and
It looks cool (trust me on this, my kids think biking commuters are awesome).

You may even get a federal income tax benefit out of it.

Under the Tax Code, your employer can provide to you ⿿ tax free ⿿ a de minimis transportation benefit. Yes, I know I've written before that de minimis is Latin for "you're not getting a real perk" but I'm kidding: it's really Latin for "of minimum importance" or "trifling" which, quite frankly, sounds worse. But if your employer provides a local transportation benefit that has so little value that accounting for it would be administratively impractical, the IRS allows you to exclude it from your income.

One of those de minimis transportation benefits is the qualified bicycle commuting reimbursement. For any calendar year, you can exclude any reimbursement provided to you by your employer for the purchase of a bicycle and bicycle improvements, repair and storage so long as the bicycle is regularly used for travel between your residence and place of employment.

The amount of the exclusion is figured by month. For 2012, the exclusion is $20 multiplied by the number of qualified bicycle commuting months. A qualified bicycle commuting month is any month that you regularly use the bicycle for a substantial portion of the travel between your residence and place of employment so long as you do not also receive transportation in a commuter highway vehicle, any transit pass or qualified parking benefits. Of course, your employer could pay you more ⿿ but anything over the limit would be considered taxable compensation.

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