Updated in October 2024

Over the last decade, the U.S. has seen bike ridership boom as successful bike share programs, bike lane installations, and other bike-friendly initiatives encouraged people to get out and ride. Booming bike ridership is also changing the way commuters get to work. Starting in 2026, or potentially even sooner, employers could join the bike boom in a big way. Here's everything you need to know to prepare for pre-tax bike commute benefits.

What are pre-tax benefits?

After salary, pre-tax benefits are perhaps the next most impactful compensatory tool that employers have to attract and retain employees. When an employee is offered and accepts a pre-tax benefit, the employer withholds a certain amount of the employee’s income before taxes are deducted for the employee to spend on qualified purchases of their choice. Every time the employee spends that pre-tax money, they’re effectively getting a 30% discount on their purchase (the value of the taxes they would have paid).

Retirement savings are perhaps the best known category of these “fringe benefits,” but the U.S. tax code also allows fringe benefits to cover costs related to moving expenses and commuting.

What commuter benefits are available today pre-tax?

As of 2024, U.S. commute benefits cover three categories of travel:

• Transit: any pass, token, farecard, voucher, or similar entitling a person to ride mass transit.
• Vanpool: termed “commuter highway vehicles,” this category includes any vehicle with at least 6 adults that spends 80%+ of its mileage making commute trips.
• Parking: either at the office or at a transportation facility along the way, such as a train station or park and ride.

Employees can have up to $315 reserved each month for pre-tax spending for transit and vanpool and another $315 for parking. In 2025, the allowable amount will increase to $325 per month.

How do bikes fit into commuter benefits?

For several years, bikes were an eligible commuter benefit. In 2008, the Emergency Economic Stabilization Act was signed into law, adding qualified bike expenses as a fourth category of benefit at a level of $20 per month. This was great news, but the law was far from perfect.

• Bike expenses were eligible for reimbursement with pre-tax income, rather than flexible spending like transit and parking. This just added another bureaucratic step for commuters.
• $20 a month was much less than commuters could spend on transit and parking, which at the time was $225 per month, each.
• Commuters could only receive the bike benefit if they gave up transit and parking benefits. Bikes were the only category with this restriction.
• The law was tightly written to only cover personal pedal-powered bicycles. It didn’t cover bike share or electric bicycles.

Then in 2017, the Tax Cuts and Jobs Act suspended the bike commuter benefit until 2026. If nothing else changes, the benefit will return at $20 per month with the original limitations.

What could change before 2026?

Several members of Congress are working hard to get bikes back on the commuter benefits list sooner and with fewer restrictions.

Congressman Blumenauer (D-OR) first introduced the Bicycle Commuter Act to Congress in the 2021-2022 session, which would have reinstated the bike commuter benefit at $81 a month and resolved other bureaucratic obstacles. It passed the House of Representatives and was included in the original draft of the Build Back Better bill in 2022, but it was cut from the final version.

Now in 2023, the Bicycle Commuter Act is back. Blumenauer’s original bill is back to the House, and Senator Sherrod Brown (D-OH) sponsored a companion bill in the Senate. The House bill has 16 cosponsors so far, including Philadelphia’s own Representatives Brendan Boyle (D-PA-2) and Dwight Evans (D-PA-3)!

How can I help support this legislation?

PeopleForBikes has an online petition to build support for the new bills, and we encourage anyone who supports biking to work to sign itt. Alternatively, you can use Congress.gov’s “Find Your Members” page to look up your representatives and let them know directly that you support the bills. If you use the Congressional website, be sure to specify the bill number in your message (H.R.  3473/S. 1724).

What should I be doing as an employer?

At a minimum, be prepared for the original bike commute benefit to come back in 2026. This means ensuring your HR administration can support the benefit and are well versed in the rules around eligibility, reimbursement, and spending categories.

To be even more prepared, stay informed about the Bicycle Commuter Act and how it may bring bike benefits back sooner and in a new format. PeopleForBikes and Streetsblog provide timely and thorough coverage in their newsletters on this topic and other federal bike policies. We’ll also continue to follow these developments in the Jawnt email newsletter (you can subscribe here).

Of course, you don’t actually have to wait on Congress to begin offering bicycle commute benefits to your employees. Hundreds of employers have looked at the cost, health, and time-savings of biking and decided to cover their employees’ bike commute costs directly. Here are examples of commute benefits that employers have offered:

• Post-tax reimbursements. For example, Harvard reimburses their employees for bike costs up to $30 a month with a post-tax benefit.
• Annual allowance. Microsoft, for example, offers its employees a $900 per year “Stay Fit” allowance for expenses related to biking.
• Get paid to ride. Sonos pays their employees cash for riding their bikes to the office, up to $5 a day.

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The Jawnt unified transit platform can help administer bike share benefits and more, allowing for unique employee perks, reduction in parking use, and eventual commuter compliance. From hassle-free enrollment to comprehensive support, Jawnt’s user-friendly platform enables both employers and employees to get the most out of their transit benefit. To learn more, visit our website.