The End of the Bicycle Commuting Benefit: What You Need to Know

For years, bike commuters enjoyed a small but meaningful tax break. Employers could reimburse workers for qualified bicycle commuting expenses, and those reimbursements were excluded from taxable income. That meant employees got a little extra help for biking to work — tax-free.

But under the Offsetting Balances and Budget Balancing Act (OBBBA), this benefit is being permanently eliminated.

A man on a bike

What’s Changing

• Permanent elimination: The tax exclusion for bicycle commuting reimbursements, which had been temporarily suspended until the end of 2025, is now gone for good.

• Starting in 2026: Any reimbursements employees receive for bicycle commuting will be treated as taxable income. In other words, it will be taxed just like regular wages.

• Employer impact: Employers can still choose to offer bicycle commuting reimbursements as a perk. The difference is, employees will no longer enjoy the tax-free treatment. On the upside, employers can still deduct the cost as a normal business expense.

What This Means for Employees

If you’re biking to work and your employer reimburses you for related expenses — like bike maintenance, gear, or commuting costs — you’ll need to count that money as taxable income starting in 2026.

What This Means for Employers

You can continue to support bike commuters in your workplace, but know that the reimbursements won’t be tax-free for employees anymore. The deduction on the employer side stays intact, so it can still be part of a benefits package — just framed differently.

The Bottom Line

The bicycle commuting tax exclusion is not coming back. Employers who value sustainability and employee wellness can still encourage biking by offering reimbursements or other incentives, but employees should be aware that those perks will now come with a tax bill.