Can You Deduct Commuting Expenses on Your Tax Return?

The term “applicable annual limitation” means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year. It’s also important to note that you can’t claim the cost of travel if you are provided with free travel as part of your employment. If you didn’t have to pay for the plane bicycle commuting reimbursement ticket or the rental car, then you can’t deduct it. You also can’t deduct your daily expense of using your own vehicle if you go to your same employer’s office everyday. An election under IRC Section 83(i) applies only for federal income tax purposes. The election has no effect on the application of Social Security, Medicare, and federal unemployment insurance taxes.

Bicycle Commuting Reimbursements No Longer Excluded from Employees’ Income but Still Deductible by Employers

Launched more than 20 years ago, we’re one of the oldest government transparency and accountability websites on the Internet. The amendments made by this section shall apply to taxable years beginning after December 31, 2022. For bargaining units with an existing Memorandum of Understanding (MOU), if the MOU contains commute program language that is in conflict with these policies, the MOU language shall be controlling. Funding for this program is provided by the Division of Business Services in support of the University’s Climate Action Plan. We are transforming the risk management, business insurance, total rewards, and retirement services space through the combination of elite expertise and cutting-edge technology.

Employee Obligations

The Bicycle Commuter Program (Program) is a taxable benefit administered by the California Department of Human Resources (CalHR). This benefit is voluntarily provided by the State of California and encourages active state employees (employees) to consider bicycle commuting as a means of active transportation to and from their residences and places of employment. The Program promotes health and wellness and sustainable commuting practices by encouraging employees to use bicycles as their primary means of commuting. The Program supports the California Department of Transportation’s “Toward an Active Califor​nia State Bicycle and Pedestrian” plan to triple bicycling in the state between 2010 and 2020. For federal income tax purposes, the employer must withhold federal income tax at 37% in the tax year that the amount deferred is included in the employee’s income. If an IRC Section 83(i) election is made for an option exercise, that option will not be considered an incentive stock option or an option granted pursuant to an employee stock purchase plan.

Rep. Blumenauer introduces more generous bike commuter tax benefit

1. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law.
2. If you do use your own bike to commute, any maintenance expense is likely to be covered by the benefit.
3. CalHR strongly encourages departments to provide all reasonably available amenities.
4. WASHINGTON (BRAIN) — A proposed e-bike tax credit is not the only industry-friendly legislation being considered by Congress this year.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Departments may have internal processes which include issuing claim checks directly to you. Official websites use .govA .gov website belongs to an official government organization in the United States.

What happens if my bicycle is stolen from state property?

To be able to exclude these benefits from employee wages, you must have a specific reimbursement plan in place. The plan must require employees to verify the expenses before you reimburse them. You may also give employees vouchers if they follow detailed protocols for verifying how the voucher was used.

Unlike a flexible spending account, reimbursement comes directly from the University and is considered taxable income by the Internal Revenue Service. The tax-free §132 limit is $240 per calendar year (determined by multiplying $20 by the number of “qualified bicycle commuting months” the employee https://turbo-tax.org/ has during the calendar year). Any reimbursement in excess of the limit will be taxable income to the employee. In 2017, Congress eliminated a tax credit for bike commuters that had allowed employers to reimburse workers as much as $20 per month, pre-tax, for bike commuting expenses.

Eric Sakalowsky has been a passionate cyclist and cycling industry professional for more than 25 years who currently lives in Southern California after growing up in New England, New York, and the Philadelphia area. He believes in the power of cycling as a sport but also as a pretty simple, easy-to-deploy, and invigorating change agent that can address challenges spanning transportation/mobility, climate, and equity/access.

In fact, you wouldn’t even need to own a bike to claim the proposed benefit. This is a question that is yet to be answered, except to say you must be a “regular” bike commuter. Covering the movement to end car dependency and improve biking, walking and transit in America. If you applied for the 2023 Bike Benefit please note that applications are still being reviewed and reimbursements will be distributed later this Spring. Once distribution timing is finalized you will recieve an email with details. GovTrack helps everyone learn about and track the activities of the United States Congress.

After the suspension ends, all bicycle commuting benefits will lose their deduction. Unlike the other qualified transportation fringe benefit options under §132 (mass transit/vanpooling/parking), there is no option for employees to make pre-tax contributions for bicycle expenses. This means that qualified bicycle commuting reimbursements can only be paid for by the employer.

The meaning of “regularly” is unclear and could encompass everything from the everyday commuter to the once-a-month commuter. This issue could be resolved in subsequent administrative guidance, but that will slow implementation down and discourage employees interested in trying bike commuting from signing up for the benefit. It is undoubtedly politically challenging to reduce the parking subsidy, but it isn’t politically challenging to level this particular playing field.

If you are traveling between two job sites or work locations, these trips are considered work-related travel, not commuting. For example, if you travel between your day job and a night job, you can claim these expenses as travel, not commuting. Then, if you can establish that your home is your principal place of business, you can deduct travel expenses if you work at other locations. For example, a contractor could deduct travel expenses from his home office to a house where he is doing repairs in order to sell the property for a profit. (A)  Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment. And some good news for your employer, the money they reimburse their biking employees is tax-deductible for the company.