Read on to find a variety of benefits employers can offer their employees to encourage them to pedal to work.
Information from San Francisco Bicycle Coalition
Federal Law Provides Tax Incentive to Cycle to Work
The Federal Bike Commuter Benefit became effective Jan. 1, 2009 and cyclist commuters across the nation are excited about this development! For the first time, the federal government is recognizing bicycling as a commute option and rewarding those of us who choose the greenest form of transportation.
The Commuter Benefit is real and in effect- it is the same as all other pre-tax benefits for transit and parking currently available by the IRS. (See Section 2, “Transportation (Commuting) Benefits” of the IRS Publication 15-B (2009), Employer’s Tax Guide to Fringe Benefits)
If your company elects to offer this benefit, you can receive up to $20 a month for each month you commute primarily by bike, so long as you don’t accept any of the other transit benefit.
Many employers contract with a Commuter Benefit Provider to coordinate these programs, so have your benefit coordinator call the provider to request enrollment in the bike benefit program. As of April 2009, the SFBC has not confirmed any providers who offer the bike benefit other than Accor Services. But other providers are looking to initiate this program, so call and tell them you want it!
How to get the bike benefit at your work:
- First, talk to your employer and tell them you want this benefit. If there are other bike commuters in your office, tell them to speak up too! Make sure to mention that employers also save money by participating (about 9.5% of their FICA contribution).
- If your employer already contracts with a Commuter Benefit Provider, ask the person who coordinates these benefits to request enrollment in the bike benefit program. If the provider doesn’t offer it, find out when they plan to implement it- it’s law as of January 1, 2009. If your employer is looking for more information, a list of providers is available from the SF Department of the Environment.
- If your employer prefers to manage transit benefits in-house, rather than with a Commuter Benefit Provider, the bike benefit works exactly as the other transit benefits. Keep your receipts and turn them in to the employer for a total $240 deduction at the end of the year. (Note: very few employers actually do this in house. Confirm your employers participation before going on a spending spree!)
How to qualify for the benefit:
- Ride your bike for a ‘substantial portion’ of your commute.
- Accept only the $20 benefit for biking for transit benefits. Unfortunately, the law prohibits people from accepting both the transit benefit and biking in the same month.
- Use the money for ‘a bicycle and bicycle improvements, repair, [or] storage.’ at your local shop!
Parking Cash Out
State law requires certain employers who provide subsidized parking for their employees to offer a cash allowance in lieu of a parking space. This law is called the parking cash-out program. The intent of the law is to reduce vehicle commute trips and emissions by offering employees the option of “cashing out” their subsidized parking space and taking transit, biking, walking or carpooling to work.
This report presents eight case studies of employers who have complied with California’s cash out requirement. One employer is a government agency, and the other seven are private firms, including three law firms, one accounting firm, one bank, one managed care medical provider, and one video post production company. They range in size from 120 to 300 employees, with a combined total of 1,694 employees. The price of parking at the worksites ranged from $36 to $165 a month.
After cashing out, solo driving to work fell by 17 percent. Carpooling increased by 64 percent. Transit ridership increased by 50 percent. Walking and bicycling increased by 33 percent. Commuter parking demand fell by 11 percent.
These mode shifts reduced total vehicle miles traveled for commuting by 12 percent, with a range from 5 to 24 percent for the eight firms. To put this reduction into perspective, reducing VMT for commuting by 12 percent is equivalent to removing from the road one of every eight automobiles used for driving to work. In total, cashing out reduced 1.1 million VMT per year.
Cashing out reduced total vehicle emissions for commuting by 12 percent, with a range from 5 to 24 percent for the eight firms. To put this reduction into perspective, reducing vehicle emissions by 12 percent is equivalent to eliminating vehicle emissions for automobile commuting from January 1 to February 13 every year.
The eight employers average commuting subsidy per employee increased from $72 a month before complying with the cash-out requirement to $74 a month after complying with the cash-out requirement. The employer’s commuting subsidy declined by $70 per employee per month at one firm, and increased by an average of $13 per employee per month at the other seven firms, with a range from $8 to $33 more per employee per month.
Employers praised the cash option for its simplicity and fairness, and said that it helped to recruit and retain employees. In summary, these eight case studies show that cashing out employer-paid parking can benefit commuters, employers, taxpayers and the environment.