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Compliance Briefing Center

Legislation and Reform

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Bike Reimbursement Program changes for 2018

 

On Wednesday, December 20, 2017, the Tax Cuts and Jobs Act (H.R.1) (the Bill), which overhauls America’s tax code to deliver historic tax relief for workers, families, and job creators, was passed by both the House and Senate. The Bill was signed into law by President Donald Trump December 22, 2017. This legislation provides the most sweeping changes to the U.S. Tax Code since 1986.

Although the Bill contains numerous changes, this alert is specific to the Qualified Bicycle Reimbursement Program.

The qualified bicycle reimbursement program was a tax-free reimbursement of bicycle expenses which was suspended by the Bill through 2025. Therefore, employers continuing to offer bicycle reimbursement programs must begin on January 1, 2018 and until further notice to reimburse employees for bicycle expenses on a taxable basis. That means employees will now have employer reimbursement of bicycle benefits added to their taxable income. The employer will be liable for the matching FICA on these reimbursements and can write off the wage expenses as with any other taxable compensation.

Regardless if bike expenses were incurred during 2017, and the employer had a bike reimbursement program during 2017, expenses submitted on or after 1/1/2018 must be paid with taxed dollars.

Here is a copy of the Tax Cuts and Jobs Act policy highlights with further information about the Bill.