Bike Commuter Act Restores Tax Break, Expands Benefits to E-Bikes and Scooters Starting 2025

The new Bicycle Commuter Act of 2025 is bringing back a valuable tax break for anyone who commutes on two (or three) wheels. This bill doesn’t just reinstate the tax exclusion for employer-provided bike benefits—it seriously levels up what counts as a qualified commuting expense, effective for tax years beginning after December 31, 2024.

The Commuter Benefit Is Back (and Bigger)

If you use a bike or scooter to get to work, this is a big deal. The bill permanently ends the suspension of the bicycle commuting benefit, which means employers can once again offer this as a tax-free fringe benefit. More importantly, it dramatically expands the definition of “qualified commuting property.” It’s no longer just about standard bicycles. Now, the benefit covers expenses related to buying, leasing, repairing, or storing:

• Standard Bicycles: Your classic pedal bike is covered.
• Electric Bicycles: E-bikes are now explicitly included, provided they meet specific criteria (pedals, seat, motor under 750 watts, and assistance cuts off at 20 mph or 28 mph if it’s pedal-assist only).
• Scooters: This includes both regular and electric 2- or 3-wheel scooters, as long as the electric ones are lightweight (under 100 pounds) and don't assist above 20 mph.

Essentially, if you use a bike or scooter to get from home to the office, or even just from your home to the bus stop (bikeshare included), your employer can now chip in for the costs of keeping that ride running, and you won't pay income tax on that money.

The Fine Print: Meet the 30% Cap

While the expansion is great news, the bill introduces a new constraint on the tax exclusion amount. The tax-free benefit you receive is capped at 30% of the standard monthly transit benefit amount (Section 132(f)(2)(B)).

What does this cap mean in practice? Let’s say the standard monthly transit benefit is currently $300. Your bike benefit exclusion would be capped at $90 per month (30% of $300). If your employer was planning to reimburse you $120 a month for e-bike expenses, the extra $30 would be considered taxable income. This keeps the benefit from becoming a loophole, but it does mean high-cost items like a new e-bike purchase might not be fully covered by the exclusion in a single month. For payroll departments, this means they’ll need to track and apply this new percentage cap carefully.

Real-World Impact: Who Benefits?

This legislation is a clear win for the modern commuter. For the office worker who lives five miles from the train station, this means their employer can now subsidize that new electric scooter that solves the “last mile” problem. For the trade worker who relies on their bike to navigate city traffic, the benefit can cover the cost of a new chain, tune-ups, or even secure storage at the job site.

By including electric bikes and scooters, the bill acknowledges how people actually commute today. This provides a tangible incentive for people to choose greener, healthier ways to travel, potentially reducing reliance on cars for short trips. It also provides regulatory clarity for manufacturers and employers by setting specific technical definitions for what counts as a qualified electric bike or scooter for tax purposes.