Everyone knows that biking to work instead of driving or using public transit can save you money. What I didn’t know until recently is that it can get you tax breaks, too!
There’s this thing called the Federal Bike Commuter Benefit that allows employers to offer a tax free benefit of up to $20 per month for expenses such as “the purchase of a bicycle and bicycle improvements, repair, and storage.” You have to ride your bike a certain percentage of days, and it is an optional benefit, not one that employers are required to provide (unless you work in San Francisco). The San Francisco Bicycle Coalition has a nice summary of the tax break, but again, this is not mandatory nationwide, only in San Fran. The Bike-Sharing Blog reports that there is a bill in the House of Representatives (HR 2288 or the Commuter Parity Act of 2013) that would increase the deduction to $35/month.
Wish my employer offered this as a benefit! I easily spend $35 per month on bicycle maintenance and improvement. Alas, I work for a teeny tiny firm that is unlikely to sign up. If there are a couple of bike commuters in your office, rally the troops and ask HR!
For Independent Contractors
OK, this one I did know about, and put into effect when I filed my 2012 taxes.
Many people I know (myself included!) make all or some of their living as independent contractors. For tax purposes, this means that qualified expenses can be deducted against your income. Transportation is part of that. Do you use a bike to run errands related to your business? To go to meetings? To get to your studio/office? Is your business bike-related? Talk to your accountant about what qualifies.
The Bottom Line
None of this is likely to add up to huge money, but little things do add up – a bell here, a new chain there, a saddle that you can love. Stretch your budget further by maximizing tax benefits – on top of the gas and bus pass savings!