E-BIKE Act in Congress would provide tax breaks for e-bike purchases. Will it help?

E-Bike act to encourage use of e-bikes and reduce carbon emissions, but will it?

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E-bikes can help fight against climate change, welcome more people into our sport, and be lots of fun. To help encourage more people to commute by e-bike, United States Congressman Jimmy Panetta (D-Carmel Valley) and Congressional Bike Caucus Chairman Earl Blumenauer (OR-03) have introduced the Electric Bicycle Incentive Kickstart for the Environment (E-BIKE) Act

The E-BIKE act proposes implementing a 30% consumer tax credit up to a maximum of $1,500, on purchases of new e-bikes costing less than $8,000. 

A 2019 study found that 86% of commuters in the U.S. use a private car to move between home and work. Another recent study found that converting just 15% of these journeys to e-bike would result in a 12% drop in carbon emissions.  

Congressman Panetta hopes that the E-Bike act can encourage more commuters to switch to pedalling their daily commute. 

“E-bikes are not just a fad for a select few, they are a legitimate and practical form of transportation that can help reduce our carbon emissions,” said Congressman Panetta. “My legislation will make it easier for more people from all socio-economic levels to own e-bikes and contribute to cutting our carbon output. By incentivizing the use of electric bicycles to replace car trips through a consumer tax credit, we can not only encourage more Americans to transition to greener modes of transportation, but also help fight the climate crisis.”

Specialized is one of the first major brands from the bike industry to support the E-Bike Act. 

“There is an incredible benefit to the health of people and the planet when we opt for a bike ride over a car ride. Electric bikes serve as a more accessible means for reliable transport, commuting, recreation, and fitness and have a proven impact on reducing carbon emissions,” said Mike Sinyard, Specialized Founder and CEO. “Specialized is an avid supporter of the proposed federal tax incentive put forward by the E-BIKE Act. Whichever e-bike riders choose, we believe that encouraging more bike trips is a critical part of fighting the climate crisis.”

The e-bike act is a positive step, and we hope to see it pass through congress, but can this single act have an effect on the roads?  

Could it be argued the E-Bike act being exclusively for e-bikes narrows the window of opportunity? While a 30% tax credit is undoubtedly welcome, e-bikes tend to be more expensive anyway. The e-bike act will help some invest in an e-bike, but the option will still be out of financial reach for many. Tax credits on all push bikes would make bikes more accessible to all, potentially resulting in greater modal shift.

A report published in 2019 by the U.K. parliament found that in 2017 67% of all U.K. journeys were less than five miles. Yet, motor vehicles accounted for more than 80% of trips between two and five miles. 

These distances are within reach for many on a standard bike. Converting more of these journeys over these short distances to any form of bike would result in enormous benefits for the environment and similar congestion reductions. 

The U.K. and Ireland have implemented cycle to work tax exemption initiatives to promote active travel, reduce congestion and reduce environmental pollution. The scheme allows an employer to purchase a bike and hire it back to an employee. The system saves the employee the percentage of their tax and national insurance contribution off a bike and accessories price, 32% for most. The employee pays the remaining balance in monthly payments through a salary sacrifice. 

The scheme is not without its flaws. The bike belongs to the employer, meaning at the end of the salary sacrifice period despite having already paid the bike’s value in monthly payments, the employee must pay a “fair market value” to take ownership of the bike. Quite often, employers sell the bike for a nominal fee to the employee, but this is not always the case. 

Questions remain about the scheme’s impact with numbers commuting by bike in England and Wales staying at 2.8% in the ten years proceeding the launch of the scheme. Anecdotally reports suggest it is most often cyclists who avail of the cycle to work scheme to upgrade their leisure bikes, rather than to purchase a bike for commuting.

It has also been pointed out the requirement to be in employment to access the benefits of the cycle to work scheme, thereby excluding the unemployed. Arguably, those seeking employment could benefit the most from having access to a bike that could enable them to travel more easily for work, especially those in urban areas. 

Campaigners also point out that the main barriers for those considering active travel are safety concerns, lack of safe cycling infrastructure, and a lack of connectivity for cycling infrastructure.

In a study conducted by U.K. charity Sustrans, 78% of Belfast residents “think cycling safety needs to be improved” and 48% cite safety as the biggest barrier to cycling.

Without addressing these concerns, a modal shift will be challenging to achieve. 

Which comes first? More cyclists or more cycling infrastructure ?

In 2006 Spanish city Seville took a holistic approach to promote cycling. Rather than creating disconnected trial cycle lanes, Seville introduced 50miles of a well-connected cycling network and 2,500 hire bikes in the first year alone. The city extended the network to 80miles within three years. The result is a cycling modal share increase from 0.5% to 7% in just ten years. 

Other cities around Europe are now taking the same “grand plan” style approach, as highlighted by the Sustrans Bike Life report

We welcome the E-Bike act and hope it can stimulate a grand plan style approach in more cities.

Show your support via People For Bikes.

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