Page 293 - Small Business IRS Training Guides

In 2017, qualified bicycle commuting reimbursements of up to $20 per month could be offered as a tax-free benefit

(i.e., excludable from an employee’s taxable income and excluded from wages for employment tax purposes), for any

month in which the employees regularly used a bicycle to travel to a place of employment, and during which the
employee did not receive transportation via a commuter highway vehicle, a transit pass, or qualified parking from an

employer. See IRC 132(f)(5)(F).

Amounts which are excluded from gross income under IRC 132 are also excluded from Federal Insurance Contributions
Act (FICA) taxes (both social security and Medicare) and Federal income tax withholding. IRC 3121(a)(20) and
IRC 3401(a)(19).

New Tax Provision

TCJA Act section 11047 suspends the exclusion from gross income and wages for qualified bicycle commuting

reimbursements for taxable years beginning after December 31, 2017, and before January 1, 2026.

Thus, qualified bicycle commuting reimbursements are not excludable from income or wages for any taxable year

beginning after December 31, 2017 and before January 1, 2026. However, employers can continue to take income tax
deductions for reimbursements provided to employees for bicycle commuting expenses.

The other qualified transportation benefits remain non-taxable.

Audit Considerations

Employers should include any bicycle commuting reimbursements as wage income in the Form W-2 after
December 31, 2017.

All non-excludable taxable fringe benefits (including bicycle reimbursements) are includable in box 1 of Form W-2 as
wages, tips, and other compensation and, if applicable, in boxes 3 and 5 as social security and Medicare wages (subject

to wage limitations).

73233-102 11047-4 Tax Cuts and Jobs Act