Commuting dollars for bike commuters were saved in a last-minute deal in Washington at the end of 2010.
Signed by President Obama, the 2010 Tax Relief Act extends the current $230 monthly limit for pretax transit benefits through 2011. Without it, commuters would have seen their limit for transit expenses cut to $120.
Most importantly for cyclists, the plan includes the Qualified Transportation Fringe (QTF) benefit, which gives you up to $20 a month reimbursement for commuter bicycle expenses (to buy, rent, repair or store a bicycle used for commuting). Sweet.
But how’s it work? A company’s qualified transportation benefit plan (QTB – oh the acronyms!) allows its employees to use pretax funds to pay work-related transportation expenses.
There are two types of accounts: A transit account reimburses expenses for mass transit like Muni, BART and Caltrain, and cycling. The other type is just for parking, such as at the workplace. Employees may participate in one or both accounts, but not in the same month. Benefits are excluded from federal income and payroll taxes, and most state taxes, up to the monthly limits.
How do you get started? Check with your employer to see if they have a QTB. San Francisco’s Commuter Benefits Ordinance requires companies with 20 or more employees to offer commuter tax benefits (for employees who work an average of 10 or more hours per week). A QTB is one way they can do so. (If you’re interested in the nitty-gritty of the tax rules, most of them can be found here.)
For bike commuters, this works out to about a dollar a day, which isn’t much, but it’s a nice bonus to the already good deal of riding a bike to work!
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