Expand commuter tax credit programs to support walking and bicycling
Action
The State should implement or expand a commuter tax credit program to include additional energy saving modes of travel, such as walking and biking. This would provide an incentive for employers to locate and citizens to live in compact, walkable, and transit-accessible communities. To lead by example, the State should offer its own employees these benefits.
Process
Commuter tax credit programs exist in most states. For example, in Minnesota, the state allows corporations to claim a 30 percent credit on state corporate franchise taxes when the corporation provides a transit benefit to its employees. In addition, corporations are allowed to claim net expenditure on transit as a business expense, which can be itemized and deducted in both state and federal tax filings.
Most commuter tax credit programs focus on encouraging transit use. It is possible, however, to expand the range of the program to provide incentives for other non-automobile modes, including walking and bicycling. Credits can be provided to the employer to cover the cost of providing features such as bike racks, showers and sidewalk improvements that make biking and walking safer and more comfortable. Alternatively, the commuter can be given the credits directly. Credits provided to the commuter could help to defray such costs, the price of the bicycle, cycling gear, or even walking shoes. If the credit was large enough, it could help defer housing costs to allow the commuter to live within walking or bicycling distance of their place of work.
Under most programs, the credit amount is modest. The city of Palo Alto, for instance provides bike commuters $20 per month in taxable cash benefits if they commute by bicycle to 60 percent or more of their scheduled shifts. Similarly, under the U.S. Bicycle Commuter Tax Credit, bike commuters can receive a monthly federal tax credit of $20 for bike commuting.
Examples
- Washington's Commute Trip Reduction Program
In 1991 the Washington State Legislature passed the Commute Reduction Law. The act allowed employers to receive a tax credit for subsidies they provided to their employees for using public transit, carpooling, bicycling or walking to work. In 1999, the credit was discontinued. In 2006, the legislature passed the Commute Trip Reduction Efficiency Act, requiring the nine counties with the greatest traffic congestion to develop strategies to reduce single-occupant vehicle trips. In addition, the largest employers in those counties are also required to develop plans. The participating counties and employers are provided with technical assistance by the State Department of Transportation.
— Washington Commute Trip Reduction Tax Credit
