Commuting - Tax Breaks

Doesn't it seem odd that you can get tax breaks for buying and commuting to work in "alternatively powered" and "Hybrid" vehicles, but you can't get any breaks for purchasing and commuting with a Bicycle, which puts out ZERO pollution?

Matt
Peachtree City GA

Simply easier to prove that you own one of those vehicules vs. commuting. I suppose that anyone could own a bike thus say they commute to work.

I'm curious, how would you have commuters prove that they bike into work thus be eligible for tax breaks? This is always something I have asked myself...

I think it has more to do with trying to subsidize businesses producing hybrid vehicles. My understanding is that the vehicles are being sold at a huge loss due to the lack of economies of scale. The Govt sees this technology as good, so it is providing additional incentives to get people to use the hybrid technology, so companies start making money on these options and continue to produce them.

The reasons why I would think the govt. would do this for vehicles and not bicycles, is that bicycles are not a reasonable form of transportation for most Americans. We can debate the reasons why that's true, but right now it is true. We live too far away from work, bikes do not provide the ability to transport infants, our families are spread all over the country etc. There is no way you will get the average american to get on a bike and ride for an hour (riding slow so the don't need a shower when they get there) to get to the mall 10 miles away and then an hour back, when they can get in a car and be there in 20 min. To that end, promoting bikes as an alternative is a losing proposition.

A cleaner burning more efficient engine is a valid alternative to the ICE, and the disadvantages from the typical amerian's POV are much less significant than the disadvantages of riding a bike. So to the extent that promoting this technology can help reduce the damage being done to the environment by the ICE, it is in the public's interest to support this technology, hence the subsidy.

I think it would be up to the employer to verify if an employee were commuting by bike or not. They already submit pay/tax info to the IRS. This could be taken a step further and establish incentives for employers to push for commuting.

When you commute by bicycle (or do any utility riding) you get a nice tax break from avoiding gas purchases. If you are lucky enough not to even own a car, you save on gas and registration taxes plus not having to pay sales tax on the original purchase of the car.

i think they should raise gas taxes and lower other taxes (say, on food and homes) as a way of effectively "subsidizing" bicycle commuting.

i think they should raise gas taxes and lower other taxes (say, on food and homes) as a way of effectively "subsidizing" bicycle commuting.

Agreed. On a related note, the New York transit authority is again asking for a fare hike; last time they did so, one alternative entertained (but overturned through really shady, manipulative tactics) was putting tolls on some auto traffic instead, and using that money to fund transit - in ny opinion, an excellent idea!

When you commute by bicycle (or do any utility riding) you get a nice tax break from avoiding gas purchases. If you are lucky enough not to even own a car, you save on gas and registration taxes plus not having to pay sales tax on the original purchase of the car.

I guess that's a good point about saving on gas and gas taxes. Unfortunately, it's not practicel (for me) to totally live without a car, but I could defintely save money on gas if I rode to work. Part of the problem with riding to work is that I work in a small office with no shower. How does everyone else get around that problem?

Matt

I ride slowly enough in the summer that I don't get soaked. I also either carry my suit jacket/sport jacket or leave it in my office during the summer. This works quite well over a 5 mile 30 minute ride in the Washington, DC area.

Paul

Simply easier to prove that you own one of those vehicules vs. commuting. I suppose that anyone could own a bike thus say they commute to work. I'm curious, how would you have commuters prove that they bike into work thus be eligible for tax breaks? This is always something I have asked myself...

There has been something pending in Congress to do this for years, but we shouldn't hold our breath. How to verify? The IRS could do it the same way they do the mileage deduction--they trust your figures, but you have to keep contemporary records justifying the tax break. If you lie and don't get caught, you get away with something. If you lie and get caught, you go to prison.

i think most bicycle commuters would rather see money spent on bike paths, lanes and such, instead of a tax break. I would anyway.


i think they should raise gas taxes and lower other taxes (say, on food and homes) as a way of effectively "subsidizing" bicycle commuting.

That's a good idea, raising the price would help people re-evaluate their transportation options. Most people think their car is the only option, but I have spent more of my adult years without a car than with. Now I'm married and the wife and I share 1 economy car. Every so often I think "Man it would be more convient to have a second car" but then I think that I'd rather spend the thousands of dollars on other stuff.

They should put loads of tax on gas then people would live closer to their work, and shopping malls wouldnt be built out in the middle of nowhere.

i think most bicycle commuters would rather see money spent on bike paths, lanes and such, instead of a tax break. I would anyway.

I'm of a different mind: keep the roads as they are, since I prefer wide shoulders to bike lanes.

I think it has more to do with trying to subsidize businesses producing hybrid vehicles. My understanding is that the vehicles are being sold at a huge loss due to the lack of economies of scale. The Govt sees this technology as good, so it is providing additional incentives to get people to use the hybrid technology, so companies start making money on these options and continue to produce them.


Fine and dandy, but I'm still waiting for someone to tell me why the old fashioned gas guzzlers get tax breaks too. Heck, for a lot of people in this country, it's cheaper to drive one of those things to work than it is to drive a smaller, more efficient car.

Let's be honest here, it's all about votes. Subsidise people to drive whatever vehicle, and you have a vote winner. I guess the advantage here for hybrid vehicles is that they can also win support from green voters by claiming to be "supporting sustainable transport".

Fact is, there is unlikely to ever be a significant tax break for cycle commuters because there just aren't enough votes among us to achieve it. It's as simple as that. Now if we had some slick sales people selling the idea of cycling to work, and increased our numbers enough to drown out the "why do they get a tax break?" whiners, we might have a chance.

Maybe you could offer a deduction, or even credit, for commuter-bikes sold fully equipped with lights, fenders, racks, etc. It is reasonable to assume that the purchaser intends to use them for transportation. If the bike is used for transportation, it will substitute for a car on some trips, saving fuel, freeing up parking spaces, and helping air quality, so there is a public benefit.

Considering that a new hybrid requires significant resources to build and does not free up a parking space, there might be a reasonable case to subsidize the cycle. It would be a good little economics/public policy question to do the numbers on.

Paul

Well, I use my road bike for my commuting- I have lights, but no fenders or racks. I use the messenger bags to carry my groceries, etc. and I should get a tax break too.

I called the IRS and debated them at length about getting tax breaks for a hybrid vs. getting a tax break for my bike. Although they acknowledged I was right, they said they still couldn't consider my bike as a legit write off. :(

Koffee

You can also get an income tax deduction for the miles you drive a car for charity purposes (it's a per-mile "expense"). This accounts for about 2/3 of the miles I put on my car. But I also often bike to places where I do charity work, and there is a per-mile expense to owning/riding a bike. Granted, it's less per mile than a car, but the tax deduction is zero.

You can also get an income tax deduction for the miles you drive a car for charity purposes (it's a per-mile "expense"). This accounts for about 2/3 of the miles I put on my car. But I also often bike to places where I do charity work, and there is a per-mile expense to owning/riding a bike. Granted, it's less per mile than a car, but the tax deduction is zero.

My company pays per-mile for company travel. But it's called "Auto mileage" in the expense form. I wish it were called "Company travel" or "Business mileage" so I could get it for when I use my bike, or even the train. But unless I want to pay from my pocket for these short ( < 100 miles) trips, I'll have to drive the car. :(

in the 2004 trek catalog, towards the back, on the pages where they attempted to sell some beautiful european style commuters, is appropriately a bit about the guy who runs the bike gallery in oregon. apparently he helped to spearhead a program inwhich if a driver's car failed an emissions test, and they wanted to scrap it, they would get a voucher for $500 towards a bike.

this is brilliant.

I wrote my bike off a few years ago. As a self-employed musician outside of my regular day job, I use the bike to commute to gigs and rehearsals and my accountant said it was okay. I'm going to see if my wife can do the same this year now that she is self-employed and uses her bike to get to work sometimes.

In fact, let's take this to an extreme of ridiculous reality.

At the end of the 1990s, the Australian Government adopted Australia Cycling which was a strategy supposedly aimed at encouraging increased bike usage. It was full of motherhood statements and principles, but most of the responsibiity for the strategy's delivery fell to other authorities -- the States and local government. A frankly, they weren't that interested in being dictated to by the big-brother government in Canberra.

The strategy remained hugely under-resourced for most of its five-year life and whatever resourcing provided by the Feds went into administration, sh!tfights between departments over why they didn't want to host the secretariat (Roads, Greenhouse Gas, and so on), junkets for various senior public servants, and research by expensive consulting companies.

Anyway, introduction of tax incentives were never on the agenda. The old "they don't pay registration or fuel tax to be on the roads, they're there for free, so why should we introduced any" philosophy, I suppose. (As an aside, I think tax incentives for saving the community from environmental disaster and various other issues is a fundamental that cycling advocates should promote everywhere to encourage transport cycling).

Then here in Tasmania, along comes an incentive program to get vehicle commuters to convert to three-days-a-week bike riding to and from work. The Cycling25 program. It relied on sponsorship from employers, and the incentive for participants was doing a comprehensive training course including health assessments, and at the end of 12 months, they got to keep for free the bike with which they were issued.

Well, blow me down if the good old tax man didn't intervene. The whole project was almost lost when employers were told they were liable for Fringe Benefits Tax, because they were providing bikes to their employees for free. Arrrrggghhhh! It was just so pernicious, and gave lie to the Federal Government's commitment to any sort of cycling strategy.

I have always maintained that the tax system is loaded against any form of alternative transport such as cycling. Middle managers are desperate to get promotion that provides them with free motor vehicle use as a benefit. They aren't going to jeopardise those opportunties by promoting cycling.

And our far-Western economies are so dependent on the car industry and motor vehicle transport (for employment and revenues) that the scenarios are unlikely to change. Ever. Whenever a big car maker here in Australia threatens to close down a factory, the State and Federal Government come running in droves offering huge tax incentives to keep them open. I think the last one in Victoria cost $60 million.

I am, however, smug in the knowledge that I am not paying unwarranted tax on fuel (and registration and stamp duty and so on) by riding my bike and refusing to own a motor vehicle.

I have always maintained that the tax system is loaded against any form of alternative transport such as cycling. Middle managers are desperate to get promotion that provides them with free motor vehicle use as a benefit. They aren't going to jeopardise those opportunties by promoting cycling.

And our far-Western economies are so dependent on the car industry and motor vehicle transport (for employment and revenues) that the scenarios are unlikely to change. Ever. Whenever a big car maker here in Australia threatens to close down a factory, the State and Federal Government come running in droves offering huge tax incentives to keep them open. I think the last one in Victoria cost $60 million.

I am, however, smug in the knowledge that I am not paying unwarranted tax on fuel (and registration and stamp duty and so on) by riding my bike and refusing to own a motor vehicle.

I didn't have time to reply to this one during my lunch break today, so I'll do so now. Rowan has hit the nail right on the head once again, especially with the final paragraph. Anyone who thinks a few tax incentives are going to suddenly get a whole heap of people riding to work is going to be sadly mistaken. Those of us who have dumped (or in my case, never owned) the car realise just how much we save by doing just that.

Now let's look at how much a tax break would allow us to save by comparision. Firstly, if it's like any other tax deduction, you can only get a deduction for amounts you actually spend, unless you want to commit fraud, but that's another argument (and that loophole isn't going to get anybody on a bike to begin with). Now just how much do you necessarily incur in cycling to work? Let's look at the things you absolutely have to have, not the extras that we all indulge in. Try convincing the tax man that you need a $3,000 road bike to cycle to work when a $250 K-Mart special will "do the job just as well".

Even if you could convince the tax man you need something better than the $250 clunker, let's now look at how much you would actually save. The deduction would only benefit you up to the amount the tax man was going to take to begin with as a percentage of what you actually spent. The top marginal tax rate here in Australia is 47% (48.5% with the medicare levy, plus another 1% if you earn > $50,000 p.a. and have no health insurance). Now consider that most people in this tax bracket channel their income and expenses through a company, where the tax rate is only 30%.

So what you're left with is a deduction that will save you about 30% of what you "necessarily incur" on the bike each year. How much would you say that equates to? And don't forget to deduct a percentage of that figure for "private use" unless you use the bike only for work. I reckon you'd be lucky to get away with a deduction of $500 per annum, in fact that's probably stretching it.

Now compare that to the estimated $5,000-$10,000 I save every year by not owning a car. Frankly, if the savings that I make aren't enough to entice people to start cycling to work, I'm pretty sure a tax saving of $250 to $500 isn't going to have much effect.

One other thing to add to my post above that I neglected (but suddenly remembered as soon as I logged off to go for a ride) -- if that bike costs more than $300, you won't get an upfront deduction for it's purchase. It will have to be written off over the "effective life" of the asset, which under the ATO guidelines is 10 years (although these are only "guidelines" rather than rules, but to deviate too much would be a trigger for an audit). Again, one asks, just how much would you really get back?

Now I promise to shut up about this topic.

I'm of a different mind: keep the roads as they are, since I prefer wide shoulders to bike lanes.

I would love to see wide shoulders... Fix the roads! Make room for bikes!

Too many usable roads suddenly turn narrow or allow autos to park on the sides rendering the road dangerous.