Employers Keep ‘Green’ Commuting Perks Despite Lost Tax Advantages

To paraphrase one of former U.S. House of Representatives Speaker Tip O'Neill's favorite sayings, "All commuting policy, like all politics, is local."

The December passage of the Tax Cuts and Jobs Act made profound changes in the federal tax code, and some of those changes include how employers provide commuting benefits to their workers.

The tax law eliminated the business deduction for qualified mass-transit and parking benefits, except as necessary for ensuring the safety of an employee, beginning in 2018. Employer-paid commuting benefits continue to be treated as nontaxable income, up to $260 per employee per month.

Tax-exempt employers aren't spared; they will be subject to the tax on unrelated business income for any qualified transportation benefits provided to employees.

Bike-to-work benefits were treated even more unfavorably. The legislation suspended the $20 per employee per month exclusion from gross income for biking benefits for 2018 through 2025. This means that employer reimbursements for bicycle commuting expenses are not deductible by employers and they are taxable to employees.

Tax breaks, however, aren't the only reason to offer an employee benefit, and HR directors that provide subsidies for "green" mass-transit and biking benefits say the federal law has had little to no effect on their policies.

"The short answer is no, I don't see it changing what Augsburg University does for our faculty and staff or our students, mainly because we have a strong commitment to both environmental stewardship and our community," Nicole Peterlin, SHRM-CP, HR specialist at the Minneapolis university, said.

The university is among those enterprises that have made an organized effort to encourage sustainable commuting practices. Following a 2015 survey in which 78 percent of employees said they drove alone to work, the university aimed to reduce those solo trips by 28 percent, which it eventually did. The university was named a 2017 Commuter Choice Award winner by the regional transit authority.

Madison, Wis.-based Aprilaire is also committed to a sustainable commuting effort, including a strong push for bike commuting, despite the tax changes, said Bill Herman, corporate HR director for Aprilaire and its parent company, Research Products Corp. Herman has detected no reduction in the level of commitment to green commuting initiatives among his associates in the Madison business community.

"It's the right thing for the health and wellness of our workforce, and it's the right thing to get cars off the road as much as we can," he said. He estimates that 30 to 40 employees, or about 19 percent of Aprilaire's Madison workforce, regularly commute by bike.

Springtime Reminders

Warming weather is a perfect time for employers to promote commuting programs such as public-private partnerships like Drive Less CT, a monthlong contest sponsored by the Connecticut Department of Transportation. May is also National Bike Month, sponsored by the League of American Bicyclists, and during the month, cycle-commuting posts often dominate cycling blogs.

Kendle Bjelland, program manager for Commute Seattle, a not-for-profit transportation management agency that helps coordinate commuting resources for the Seattle region, said promoting cycling and public transportation in the area stems in part from a fairly simple reason.

"There is simply no room to add more bridges and highways into the city, so the only way it was possible to absorb the job growth over the past 10 years has been to get people in more efficiently," she said.

Commute Seattle's 2017 survey of commuting trends in the city showed a significant decrease in single-occupant vehicles since 2010, from 34.5 percent of trips to 25.4 percent, while public-transit use rose from 42.3 percent to 48.4 percent of daily commutes.

Percentage-wise, bicycle commuting remained essentially flat at 3 percent, but Bjelland pointed out that Seattle has added 60,000 jobs in the survey's time span, "so the actual number of cyclists has gone up quite a bit."

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Infrastructure Counts; So Does Culture

To take sustainable commuting to the next level, local governments must cooperate with businesses in planning bike lanes and other green transportation initiatives. In Seattle, the top seven companies for bicycle commuting were within one block of a bike trail or protected bike lane. Aprilaire is adjacent to a trail in Madison, and Augsburg University is within blocks of the Minneapolis trail network, some of which parallels the Twin Cities' light rail.

Aprilaire sponsors a team of riders in an annual Bike the Barns riding challenge and other events, and it organizes group bicycle rides on local bike paths during the lunch hour, with many participants using the Madison B-cycle bike-share stations that allow members to check bikes in and out at 39 sites.

Commuting benefits often fit into Aprilaire's larger corporate sustainability initiatives, and minor tweaks to tax incentives have thus far not been an issue, Herman said.

"We are monitoring [developments] but haven't heard about anybody changing practices" in the tax bill's aftermath, said Larry Filler, senior director of CTRides, Connecticut's commuting agency.

Instead, "we are seeing more companies join our program. And those companies in the program are tending to do more [to reduce the number of cars on the road]. People recognize commuting is difficult for their employees and realize they have a role in helping out."

Related SHRM Article:

What Happens After Tax Law Scuttles Employers' Deduction for Commuting Benefits?, SHRM Online Benefits, December 2017