As discussed in this prior IllinoisBicycleLaw.com post, the 2008 "Bailout Bill" included tax credits for bicycle commuters. These tax credits are officially known as "Bicycle Commuting Reimbursements." However, until recently the details on this were unclear. The IRS has released Publication 15-B (2009) which offers guidance for how the program should work.
This New York Times article offers further details as to how many mid-sized companies are utilizing the tax credits as well as the future for transportation tax credits that may include tax credits for those who bike and take mass transit.
Here's the pertinent section from Publication 125-B (2009):
Qualified bicycle commuting reimbursement. For any calendar year, the exclusion for qualified bicycle commuting reimbursement includes any employer reimbursement during the 15-month period beginning with the first day of the calendar year for reasonable expenses incurred by the employee during the calendar year. Reasonable expenses include:
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The purchase of a bicycle and
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Bicycle improvements, repair, and storage.
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A current employee.
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A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control.
A self-employed individual is not an employee for qualified transportation benefits.
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$120 per month for combined commuter highway vehicle transportation and transit passes.
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$230 per month for qualified parking.
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$20 per qualified bicycle commuting month.
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Regularly uses the bicycle for a substantial portion of the travel between the employee's residence and place of employment and
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Does not receive:
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Transportation in a commuter highway vehicle,
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Any transit pass, or
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Qualified parking benefits.
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