How the U.S. Tax Code Favors Driving Over Other Modes

If you get to work by transit or bike, you’re saving a lot of money on gas, but come tax season, Uncle Sam probably won’t be as generous to you as he’ll be to car commuters.

The Tri-State Transportation Campaign took a look recently at the way tax benefits apply to different modes of transportation. Renata Silberblatt writes:

We did find that the federal tax code provides benefits to vehicle owners but offers limited incentives for taxpayers to take transit or bike.

Here are the tax benefits they found for each category:

For Drivers:

  • Tax deduction for donating vehicles to charity
  • People involved in crashes where they were not found to be at fault can deduct unreimbursed expenses
  • Tax credits for fuel efficient vehicles (recently expired)
  • Up to $245 per month in tax-deductible parking expenses

For Transit Riders/Vanpoolers:

  • Up to $245 per month in tax-deductible commuting expenses (valid only through the end of 2013)
  • Up to $245 per month in tax-deductible parking expenses

For Bike Commuters:

  • Bike commuters can be reimbursed $20 per month for expenses related to commuting (cannot be used with any other commuting benefit).

Tri-State concludes that U.S. tax code does seem to favor driving, when common sense would dictate the opposite:

Given the many benefits of vanpooling, riding transit or biking — to the environment, to drivers on the road, to the roads themselves, and, if one is biking, to one’s personal health and to healthcare costs for the community as a whole — it’s a wonder that our taxes don’t encourage these behaviors more.

For example, a commuter cannot take the bicycling reimbursement and commuter tax credit together. This doesn’t seem fair, given that some people bike to a transit station, or some may bike a few days a week and take transit the other days.

As Congress begins discussions about reforming the tax code, the opportunity should be used to either create greater parity in the tax code for non-drivers or greater incentives to make smarter and more sustainable transportation choices.

Elsewhere on the Network today: The Get Around Blog laments that deaths caused by auto collisions don’t get as much attention in the press as gun deaths. World Streets begins imagining what a transportation system designed around equity would look like. And Rebuilding Place in the Urban Space turns a critical eye on recent media reports about red light cameras in Washington, D.C.