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Public health bill would give tax incentive for new bike purchase

Posted by on June 1st, 2009 at 1:46 pm

A Better Cycle -7.jpg

An exercise equipment store.
(Photo © J. Maus)

A bill introduced by the United States House of Representatives in April would allow Americans to spend up to $1,000 in pre-tax dollars in a “flex-spend” account for the purchase of “qualified sports and fitness expenses.”

The Public Health Investment Today (PHIT) Act of 2009 (H.R. 2105, cleverly known as the “fit” bill) was introduced by Congressman Ron Kind (D-WI) and lists 12 co-sponsors, including Portland’s own Rep. Earl Blumenauer.

According to Rep. Kind’s Press Secretary Leah Hunter, up to $250 of the purchase of a new bicycle would qualify for the deduction.

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If the bill passes, section 213(d) of the Internal Revenue Code of 1986 would be amended to include a subparagraph for, “qualified sports and fitness expenses.” Expenses covered under the new law would include; membership at a fitness center, participation or instruction in a program of physical exercise or physical activity, and “equipment for use in a program (including a self-directed program) of physical exercise or physical activity.”

Taxpayers would have up to $1,000 per person per year ($2,000 for families) that could be deducted. Of that, a maximum of $250 per item could be paid with pre-tax dollars.

Hunter says the bill would allow Americans who already have a flex spend account set up as an employee benefit to use pre-tax dollars in this account toward fitness expenditures.

“The PHIT [say “fit”] bill will increase the types of expenditures payable out of tax-favored health investment accounts, including flex spending accounts, medical savings accounts, and/or medical reimbursement arrangements.”

The recently passed Bike Commuter Tax Benefit offers only a meager $20 per month subsidy for Americans who choose to bike to work. With this new tax incentive, surely more people would choose to go by bike to capitalize on the health and transportation win-win that they provide.

H.R. 2105 has been referred to the House Ways and Means Committee. Rep. Blumenauer is a member of that committee and he also sits on its Health subcommittee.

Read the bill text here.

[Cheers and a hat tip to Brian Palmer of the washingmachine post, who tipped me off about this after first reading it in a RoadBikeRider.com email newsletter.]

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  • John Lascurettes June 1, 2009 at 1:54 pm

    Oooooh. That Civia Hyland is withing reach. 🙂

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  • redhippie June 1, 2009 at 1:59 pm

    I wonder if Trek is located in Congressman Kind’s district?

    Great Britian also has a substantial tax right off. There, they allow the employer to buy the bike and equipment(pre-tax) and the employee pays them back the cost. I think it is up to $2k/yr.

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  • Jeremy June 1, 2009 at 2:01 pm

    This is great news –many thanks for the update. Your write:

    “With this new tax incentive, surely more people would choose to go by bike to capitalize on the health and transportation win-win that they provide.”

    Initially, I’m not as sure of this as you are. The bill might be more likely to subsidize 24-hour Fitness memberships and down payments on high-end Colnagos for weekend warriors, than daily riders.

    This being said, the bill would certainly provide a means to reach its goal of reducing the financial impact of equipment that aids in the adoption of behaviors that build greater personal fitness and health, whether that’s weekend riding, daily riding, or indoor riding at a fitness center. To that end, it seems a good thing.

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  • dsaxena June 1, 2009 at 2:07 pm

    hmm…I wonder if that would cover the folding bike I’m thinking of getting. 🙂

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  • NB June 1, 2009 at 2:07 pm

    I would expect that used bikes off Craigslist wouldn’t “qualify.” Shouldn’t we be promoting the reuse of old materials? There are so many perfectly good old bikes out in the world – no one should be buying (or, at least, be rewarded for buying) cheap bikes made overseas.

    If the bill won’t apply to used bike purchases, I don’t see why we should waste our tax dollars on it. And ditto about it most likely being used to subsidize memberships at 24-Hour Fitness or pay for carbon racing bikes that are incapable of being used for commuting, which is the type of bicycling that we (as a society, ie, the government) should be encouraging in the first place.

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  • Scott June 1, 2009 at 2:07 pm

    I’m not sure what to think of this. While I’m in favor of spending government money to encourage physical activity and improve public health, there seems to be no accountability in this tax break to actually ensure this intent is being served. Is that too much to expect?

    It sounds more like a handout to the fitness/sporting goods industries.

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  • Borgbike June 1, 2009 at 2:30 pm

    Cool! Maybe this would be a way for me to afford one of the “Bike Builders” bikes over yonder on the right hand side of this story.

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  • hemp22 June 1, 2009 at 2:41 pm

    This would be pretty cool – to get a break on both gym memberships & new bike purchases.

    But, can someone clarify for me, (I couldn’t tell from the text of the bill): would the $250 on new sporting equipment need to only apply to a full bike? or could it be used for parts/components? like a $250 wheelset? or new drivetrain?
    It seems to me like it says that any $250 in sporting equipment for an exercise regime would be acceptable, which would be great. (maybe not better than the $20/month from the commuter bill).

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  • Mike June 1, 2009 at 2:41 pm

    I wish we could write off the whole $1000 for a bicycle purchase. That would have me seriously considering an upgrade. $250 isn’t worth it though.

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  • ME 2 June 1, 2009 at 2:42 pm

    This is a great idea and I hope it gets passed. I think a lot of concerns about subsidizing gym memberships or non-commuting bikes is overblown.

    You’ll have to set aside the dollars at the start of the calendar year and if you don’t use them then you lose them.

    Also, there is already a section in the tax code that allows for using pre-tax dollars on health care so why shouldn’t there be a similar incentive for preventative measures like physical fitness? This could result in savings because physically fit people tend to need to see the doctor less frequently.

    I would much rather tax credits go to support physical fitness than co-pays for people who already don’t take good care of themselves.

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  • Mike June 1, 2009 at 2:42 pm

    I wish we could write off the whole $1000 for a bicycle purchase. That would have me seriously considering an upgrade. A $250 write-off isn’t worth it though. That would not significantly change my tax situation.

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  • Schrauf June 1, 2009 at 2:50 pm

    NB – there appears to be no restriction on the deduction being available for used items, although you would need a receipt to substantiate your purchase.

    The primary goal of the bill is improved health, although there is no reason efficient transportation / use of resources cannot be an agenda item as well.

    Keep in mind your tax savings is only as much as the deduction multiplied by your marginal rate. $100 – $300 dollars or so per $1,000 deduction, for most of us.

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  • Vance Longwell June 1, 2009 at 3:33 pm

    The fitness and health aspects of this are interesting. They are distinctions that help separate this argument from other similar ones that have been going on for centuries.

    Of course our market is not, “free”, per-say. In spirit though I think it’s fair to say it is. Now, if the government provides financial incentives to use, say mass-produced bicycles over handmade ones, wouldn’t that upset you if you were making handmade bikes? Hence my assertion that this is an age old argument.

    Let’s go with bikes=good, and cars=bad. That’s fine and I understand the surrounding argument as well about health and all. I get it, I really do. One still cannot deny that this idea is messing around with a free market. Even though it is arguably for a good cause, doesn’t change what it is.

    I’m not a big fan of government endorsed monkeying about in the market. I have a lot of friends working in the motorcycle industry, and they feel especially juked because the motorcycle is still a far better choice, environmentally anyway, than the car. They view tax incentives like this as the government paying their market not to buy their goods and services.

    Lastly, this leaves poor people, who almost categorically never even file, out in the cold yet again. Seriously. I think a better idea is to commission, and buy some, “Bikes for the People”, and hand ’em out. Serves both purposes of diminishing SOV trips, and promotes good health. Plus adds the benefit of being available clear across the economic spectrum.

    Okay, got that you Vance-haters. I’m not in opposition, I just don’t think this is very fair in a free market. Which I oppose BTW. I further think that the benefit, after all is said and done, will be negligible for people who actually get tax refunds and stuff. Much like manufacturer coupons. Seriously, who cares about a $0.10 discount on a box of cereal? The Mans though have to pay those up front to retailers, and the spend cagillions. Coupons are a huge expense to them and a big deal.

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  • Barney June 1, 2009 at 5:33 pm

    This is nice, but it’s hard to say that it’s great. I want to see a tax credit aimed directly at bike commuting. (And hey, why not mass transit commuting, too?) It aggravates me that Obama’s stimulus has a tax credit for people buying hybrid cars, yet I didn’t see anything in his plan about buying a bike for commuting.

    In the meantime, I’ll put this nice tax break toward my local gym membership, but it’s hardly an endorsement of cycling as anything more than recreation. I think it will be years before we see federal legislation that truly incentivizes cycling.

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  • Andrew Holtz June 1, 2009 at 7:43 pm

    Rather than add more complexity to the tax code… I’d much rather than Congress and the state legislature reduce the current subsidies for driving.

    Let’s eliminate tax-subsidized payments for driving to work… and raise the gas tax (or a mileage tax) to a level that reflects the actual cost motor vehicles put on society.

    Then people would see the real cost differential between driving and biking… all while making the tax code a little simpler, not more Byzantine.

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  • s June 1, 2009 at 9:17 pm

    ‘Sporting Equipment’

    You think bicycle, my neighbour thinks new hunting rifle.

    Both require hand-eye coordination and physical exhertion I suppose.

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  • sabes June 1, 2009 at 10:17 pm

    Couldn’t you just buy a bike in parts? $250 for the frame. $250 for the front wheel. $250 for the back wheel. Etc.

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  • TofuTodd June 2, 2009 at 12:15 pm

    @#5 NB – I agree, however until CL posters can put up proper frame geometries and standover height with adequate high resolution photos it just isn’t worth my time to try to sort though the hundreds of bikes I don’t want to try and find the one I do. Then have to ride all over town and test ride them all?

    @15 Andrew – totally agree. Simplify. Just make driving more expensive. Lawmakers are afraid of raising gas taxes so they do stuff like this.

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  • Max June 2, 2009 at 10:17 pm

    Is this another one of those “through your employer” tax fringe benefits?

    If so, you could make me the queen of England through the program and it would still be useless. My (large high-tech) employer isn’t interested in administering this or and any of the other fringe benefits, including the existing bike commuter benefit, public transport benefit, etc.

    When will Washington get it right? For programs like these to work, they must be be a deduction (or credit) on the individual’s tax return; not administered as an employee benefit. Do you think the people who need it most have access to these benefits? (i.e. does McDonald’s offer their employees access to pre-tax transit passes?)


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