The Energy Improvement and Extension Act of 2008, signed into law on October 3, 2008 (the “Act”),1 creates a new fringe benefit for bicycle commuters effective January 1, 2009.

Under the Internal Revenue Code’s “fringe benefit” rules,2 employers may reimburse employee commuters for “qualified transportation fringes.” Employees may, within certain limits, exclude these reimbursements from gross income. Prior to the Act, the list of qualified transportation fringes consisted of transit passes, parking, and transportation in a commuter highway vehicle, in each case provided by an employer to an employee. The Act adds “qualified bicycle commuting reimbursements” to this list of qualified transportation fringes.

The key features of the new qualified bicycle commuting reimbursement are as follows.

Please see full advisory for more information.