Qualified transportation fringe benefits (Section 132(f) of the Internal Revenue Code) or "Commuter Tax Benefits" are like money in the bank. Employers save on payroll related taxes. Employees save on federal income taxes.
Employers may provide workers with up to $230 per month in tax-free transit and vanpool benefits in 2009. The monthly limitation under Section 132(f)(2)(A) Qualified Transportation Fringe Benefits regarding the aggregate fringe benefit exclusion amount for vanpools (commuter highway vehicles) and transit passes is $230. The monthly limitation under Section 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $230. Commuters can receive both the transit and parking benefits (i.e., up to $460 per month). Employers can allow employees to use pretax dollars to pay for transit passes, vanpool fares and parking.
This is a recently added benefit and there is a lot of confusion floating around about it. Here are some resources that will help you implement a program for your bicyclists.
Over 30 Frequently Asked Questions, including ones about the bicycle commute option.