There’s plenty of credit to go around for the ongoing American bicycle boom. To name just a few: city officials who built bike lanes over the last two decades (and ramped up construction during the pandemic), apartment managers who installed bike storage for their tenants, and employers who offer subsidies to those cycling to work instead of driving.
Far down on the list would be the federal government. If anything, the feds have probably nudged Americans toward driving instead, providing little incentive for states to build bicycle infrastructure and distributing far more lavish financial subsidies to auto owners than cyclists. Congress has approved generous tax breaks for those driving to work or buying a new electric car, with nothing comparable available to those who bike. That disparity seems both inequitable (average car commuters are wealthier than bike commuters) and bad for the environment (riding a bike or e-bike produces far fewer emissions than driving even an electric car).
Now, finally, that may be about to change. The 2022 budget reconciliation package approved by the House Ways and Means Committee last week includes unprecedented financial support for cycling. If the Senate approves those provisions—a big “if”—it would mark an historic step toward closing the gap between federal treatment of cyclists and drivers. And it would come at an opportune time, with biking surging in popularity during the coronavirus crisis.
Congress has seldom paid much attention to cycling, but now House Democrats are making their support hard to miss; Ways and Means Chair Richard Neal of Massachusetts donned a bike pin at budget hearings last week. The reconciliation proposal would expand the commuter benefits program, which currently lets employees set aside up to $270 per month tax-free for workplace car parking or transit passes—but not a penny for biking. Starting in 2022, the proposal would let employees allocate up to $81 per month tax-free for the “purchase, financing, lease, rental (including bikeshare), improvement or storage” of bikes or scooters used to get to and from work. That’s almost $1,000 per year. (By the way, it’s worth noting the word “lease,” an apparent reference to monthly bike-rental services that have surged in popularity in Europe but remain rare in American cities.)
Bike-friendly House Dems also want to loosen restrictions around the 30 percent tax credit employers can claim if they install a charging station on their property. Eligibility is currently limited to electric vehicles, but the reconciliation proposal would also include chargers for e-bikes and e-scooters. Of course, commuter benefits and employer charging stations are only useful if you work for an entity that offers them. Plenty of employees—plus students, retirees, and self-employed Americans—will be left out.
In contrast, another tax credit proposed by the House—specifically for e-bikes—would go through people instead of employers. As I wrote previously in Slate, earlier this year Democratic Reps. Earl Blumenauer of Oregon and Jimmy Panetta of California proposed the EBIKE Act, which would provide a 30 percent tax credit to those purchasing a new e-bike. That bill’s basic elements made it into the House budget reconciliation language, although they’ve been heavily diluted. The credit has been cut in half, to 15 percent of the price of a new e-bike. It has also been capped at $750 for a bike costing $5,000, well above most models on the market. For a more typically priced e-bike of $1,500, a 15 percent credit would provide $225. The Ways and Means Committee also opted to make the credit means-tested, preventing a taxpayer making over $80,000 a year from claiming it. In its new and diminished form, an e-bike tax credit might nudge people on the fence toward a purchase, but it’s unlikely to trigger mass adoption.
The House may have added the new limitations due to a weirdly aggressive forecast issued by Congress’ Joint Committee on Taxation, which dramatically increased the cost of funding the credit (now estimated at more than $7 billion over the next decade). The committee projected that claims of the e-bike credit would skyrocket 11 times over 10 years, reaching $1.28 billion in 2030—equivalent to more than 2.8 million people (each making less than $80,000) buying an e-bike costing $3,000. “I would love to have this many e-bikes sold,” said Ken McLeod, the policy director of the League of American Bicyclists, “but it feels optimistic.” Other observers have been blunter, calling the estimate unrealistic.
Meanwhile, old habits die hard: The Ways and Means Committee wants to further sweeten the pot for electric automobiles. The reconciliation language would provide a tax credit of up to $12,500 off the price of an electric car ($5,000 more than today). And while the e-bike tax credit would be unavailable for those with an income over $80,000, anyone making up to $400,000 could claim the full value of the electric vehicle credit. Whether viewed through an environmental or an equity lens, that disparity—both in dollar amount and eligibility—makes little sense.
Meanwhile, cost isn’t the only determinant of people’s willingness to bike; without a safe place to ride, even a free bicycle isn’t particularly appealing. The budget reconciliation language includes a few sections that could provide funds for new bike lanes, such as nearly $4 billion to mitigate damage done by urban highways slicing through low-income communities, and another $4 billion for “Community Climate Incentives” to fund projects that reduce emissions. Those programs won’t be enough to bring the United States to European standards of bike-friendly infrastructure, but they could help.
Assuming it passes the House, the budget reconciliation bill will head to the Senate, where further changes are possible. Influential senators like West Virginia’s Joe Manchin have indicated a desire to shrink the size of the total budget bill, which could place the proposed bike benefits on the chopping block.
The complex reconciliation process will be winding its way through Congress for some time still. But the House proposals offer an encouraging sign that legislators are finally beginning to recognize the glaring gap between federal support given to drivers and cyclists. At long last, House Democrats are starting to see the bicycle for what it is: an affordable, healthy, climate-change-fighting machine.