Cycling is a form of exercise, a hobby, a sport, and even a means of getting back and forth to work. By 2017, more than 47.5 million Americans rode bicycles on a regular basis. As a means of exercise, it can provide major calorie burn and cardiovascular benefits. As a hobby, cycling is a great family activity. As a sport, it’s recognized with high-level competitions worldwide. Are you one of the many commuters who ride a bike to work? If so, there is a way that employers can help.
Commuting in the time of COVID-19
During the pandemic, gyms were hit hard by closure rules and many remained shuttered for months. This helped spur an unexpected cycling resurgence in the U.S. Bicycle sales jumped 63 percent in June 2020 over the previous year, as gym members searched for other ways to exercise and consumers sought healthy outdoor activities that the whole family could share. With more people considering what they can do to help fight climate change, electric bikes (“e-bikes”) have also surged in popularity, with sales growing by 145 percent in 2020 compared to 2019.
Major cities witnessed a high influx of bicycle commuters throughout the pandemic. During May-June 2020, the NY State Department of Transportation reported a 50 percent increase in cycling traffic in New York City over the same time in 2019, whereas in Philadelphia, bike traffic grew by 150 percent.
How employers can help with cycling costs
As employees are called back to the office, many are hesitant to resume public transport for a variety of reasons. Employers can help encourage them to seek out alternative modes of transport like riding their bikes to work.
In 1984, the U.S. introduced commuter tax benefits for parking and transit. Early on, these benefits were skewed toward major metropolitan areas but have evolved over time. In 2009, cycling was officially recognized as a commuter activity with the Bicycle Commuter Tax Benefit. Under this initiative, bicycle commuters received benefits like other commuters, and funds could be set aside pre-tax from the employee’s paycheck. While this benefit was put on hold by the Tax Cuts and Jobs Act of 2017 (TCJA), it could resume after TCJA provisions expire in 2026.
In the meantime, employers can still help their cyclist employees through a Lifestyle Spending Account (LSA). LSAs allow employers to provide workers with financial assistance for activities such as physical, mental, and financial wellness. LSAs are not tax-advantaged and have few compliance requirements. Funds paid to employees as the result of a claim against their LSA account is taxable income.
So what expenses might be reimbursed from an LSA to bicycle commuters? Common ones include:
- Initial bicycle purchase cost
- Bicycle maintenance and repairs
- Safety accessories such as helmets, lights, horns, and locks
- Storage costs
By making the choice to reward employees who cycle to work, employers can take pride in knowing they are not only helping improve employee health, but also meeting environmental sustainability objectives at the same time.
As with other types of spending accounts, it’s important to stay educated on requirements. We encourage employers to consult with a professional Third-Party Administrator (TPA) to help you manage this benefit for your cyclist employees.
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