Next week is Bike to Work week, which makes it a great time to talk about qualified transportation plans. In 2008, section 211 of the Emergency Economic Stabilization Act of 2008 added qualified bicycle commuting reimbursement to Internal Revenue Code section 132(f) applicable for taxable years beginning on Jan. 1, 2009.
For employees who commute to work by bike, a qualified transportation plan can be set up to reimburse reasonable expenses incurred by employees for the purchase of a bicycle and bicycle improvements, repair, and storage. The amount which can be reimbursed is limited annually to $20 per month multiplied by the number of qualified bicycle commuting months during the year.
A month is a “qualified bicycle commuting month” if the employee regularly uses a bicycle for a substantial portion of the travel between the employee’s residence and place of employment during the month, and the employee did not receive any qualified transportation fringe benefits for a transit pass, qualified parking or commuting to work in a highway vehicle.
For 2012, the qualified transportation fringe benefits monthly limits for transit passes, qualified parking and commuting to work in a highway vehicle are:
- Transit passes – $125 per month;
- Qualified parking – $240 per month; and
- Transportation in a commuter highway vehicle* – $125 per month.
*Note: Code section 132(f)(5)(B) defines a commuter highway vehicle as any highway vehicle with a seating capacity of at least 6 adults (not including the driver) where at least 80 percent of the mileage use of the vehicle is for transporting a sufficient number of employees in connection with travel between their residences and their place of employment. A sufficient number of employees is at least 1/2 of the adult seating capacity of such vehicle (not including the driver).