E-Bikes and Scooters Get Tax Break: New Law Reinstates and Expands Commuter Benefits Starting 2025

The Bicycle Commuter Act of 2025 is making a big move to modernize the tax code for how we get to work. Simply put, this bill immediately brings back the tax-free status for employer-provided bicycle commuting benefits, which had been suspended. Starting in tax years after December 31, 2024, if your employer helps pay for your ride, that money won’t be counted as taxable income.

The Return of the Commuter Benefit

For those who remember, there used to be a tax break for bike commuters, but it was paused. This legislation scraps the suspension (Section 132(f) of the Internal Revenue Code), making the benefit available again. The benefit now covers two main ways an employer can help: direct reimbursement for expenses you incur, or the direct provision of property, like letting you use a company bike or providing storage. To qualify, you just need to regularly use the property to travel between home and work, or to a transit stop connecting you to work.

Scooters and E-Bikes Are Officially Commuting Tools

This is where the bill gets interesting and truly modernizes the benefit. The definition of “qualified commuting property” is significantly broadened to explicitly include electric bicycles, two- or three-wheel scooters, and even electric scooters. This means if you’re using a bikeshare service to cover the last mile of your commute, those rental costs can now be covered tax-free by your employer. For e-bikes to qualify, they must have working pedals and a motor under 750 watts, with assistance cutting off at either 20 mph (for throttle-based) or 28 mph (for pedal-assist only). This is great news for anyone who’s invested in an e-bike to handle hills or longer commutes but was previously excluded from the benefit.

What’s the Catch? The New Cap

While the benefit is back, it’s not unlimited. The bill sets a clear cap: the exclusion limit for the qualified bicycle commuting benefit is 30 percent of the standard monthly transit benefit amount. This means the tax-free amount is tied to, but significantly lower than, what someone using a train or bus pass might receive. For employees, this still translates into real savings, as every dollar your employer contributes toward your bike, scooter, or repair costs up to that limit is a dollar you don’t pay income tax on. For employers, the legislation also clears up some administrative headaches by eliminating the rule that could treat the benefit as taxable income for employees just because it was offered—a concept known as “constructive receipt.”

Real-World Impact on Your Wallet and Your Commute

If you work in a city and have been thinking about ditching the car for a scooter or e-bike, this bill provides a direct financial nudge. Imagine you’re a software developer who just bought a $1,500 e-bike. If your company offers this benefit, they can now reimburse you for a portion of that cost, tax-free, over the course of the year. Or, if you’re an office worker who relies on a bikeshare membership to get from the subway station to your building, your employer can now cover that monthly cost without it showing up on your W-2 as income.

For employers, this is a relatively low-cost way to offer a valuable perk that promotes wellness and sustainability. While there will be some administrative setup to track reimbursements and ensure the purchased equipment meets the specific electric motor and weight requirements detailed in the bill, the incentive is clear: support active commuting and save on payroll taxes. This act is essentially recognizing that the modern commute involves more than just cars, trains, and buses, and is adjusting the tax code to keep up.