The U.S. tax code actively rewards automobile use by providing substantial benefits, but at the same time provides very limited benefits to those that bicycle or use mass transit. With the significant traffic and air pollution problems that many cities now have, it seems like a change in policy should be in order. A change that will actively encourage the use of bicycles and mass transportation systems rather than “subsidizing” the already ubiquitous automobile.
Recently, the Tri-State Transportation Campaign decided to take a look at the exact ways that tax code benefits apply to various forms of transportation. Renata Silberblatt is quoted as saying: “We did find that the federal tax code provides benefits to vehicle owners but offers limited incentives for taxpayers to take transit or bike.”
The key tax benefits are listed below:
Owning or operating a vehicle:
– Individuals who donate vehicles to charity can receive a tax deduction.
– Individuals who are involved in an automobile crash that is not fully reimbursed by the other driver’s insurance and is not the individual’s fault may be able to deduct the unreimbursed amount.
– Although recently expired, individuals could previously receive tax credits for the purchase or lease of certain fuel efficient vehicles and light trucks such as fuel cell vehicles, alternative fuel vehicles and hybrid vehicles. In addition, individuals can take a tax credit for qualified fuel cell vehicles serviced in 2012.
-Individuals who drive to work are eligible to take up to $245/month in a pre-tax deduction to cover their parking expenses.
Commuting to work by transit/vanpool:
– As part of the deal to avert the fiscal cliff that passed in January, transit and vanpool riders can take up to $245/month in a pre-tax deduction to cover their commute expenses. The commuter tax benefit is a retroactive fix for 2012 (when the transit tax benefit was lessened from $230 to $125) and it is not permanent, being offered only until the end of 2013. If not made permanent, the transit tax benefit will revert to a lower level comparable to previous years. Employers of those who use transit/vanpool also benefit from this deduction.
– Transit/vanpool riders can also take up to $245/month in a pre-tax deduction to pay for their parking expenses.
Commuting to work by bicycle:
– An employee can be “reimbursed up to $20/month for reasonable expenses related to commuting by bicycle.” Employers of bicycling employees can also benefit from this pre-tax deduction. This reimbursement cannot be combined with any other benefit, however. For example, if one bikes and takes transit to work, one must choose one benefit over the other.
These benefits are clearly slanted towards encouraging car use. Given the considerable public and personal health benefits of bicycling, reducing traffic/taking cars off the road, reducing air pollution, and reducing car accidents, it seems that something needs to be done to make mass transit and bicycle use on level ground with cars benefits-wise.