Spring has finally sprung, but it’s not sunshine for everyone: the new tax law axed a fringe benefit for commuters who bike to work.
Under the old tax law’s “Bicycle Commuter Act,” employers reimbursed employees up to $20 a month for qualified expenses, including bike repairs and improvements. That reimbursement was not taxed. The Tax Cut and Jobs Act suspends that benefit until January 2026, and also forbids deductions for other commuting expenses including parking, transit and vanpooling.
Under the new tax law, the only deductions employers can make for transportation costs will be for those that ensure the safety of the employee to and from work (such as a car service late at night, for example), according to benefits administrator National Benefit Services.
The biking measure is not expected to generate more than $50 million in revenue during its suspension, according to a report from Samuel Donaldson, a law professor at Georgia State University, but some experts say it nickel-and-dimes customers who can least afford it.
Cutting the bike commuting benefit affects lower-income workers
At a maximum of $240 a year, the bike commuting benefit may not sound like a lot. But it made a difference for lower-income employees who cycled to work as a cheaper alternative to commuting by car or public transportation, said Ken Podziba, president and chief executive officer of Bike New York.
Driving is six times more expensive than biking, according to a 2015 study from Sweden’s Lund University and Australia’s University of Queensland, and biking helps prevent weight gain, stress, and type 2 diabetes, according to various studies.
What’s more, the new law will affect a growing number of Americans. The number of trips made by bike more than doubled from 1.7 billion in 2001 to 4 billion in 2009, according to the National Household Travel Survey, conducted by the Federal Highway Administration. Some 15% of workers now bike to work, according to the International Foundation of Employee Benefit Plans’ recent “Transportation Benefits and Incentives” report. “While employers may be evaluating their biking to work policies in light of the tax law, attracting and retaining talented workers is the main reason organizations offer incentives for transportation methods like biking,” the authors said.
Click here to read the full article: https://www.marketwatch.com/story/biking-to-work-this-spring-it-just-got-more-expensive-under-the-new-tax-law-2018-05-02