New Bicycle Commuter Benefit--how it will work

By now you've probably heard about the new tax-free fringe benefit that employers can offer to those who commute by bicycle.

But you've probably been wondering--how does this work? How can I take advantage of it?

The BikeLeague has some answers to frequently asked questions, including how you can sign up and how much you might save.

The San Francisco Bicycle Coalition also has a good roundup about the details of the program:
On January 1st 2009, the Bicycle Commuter federal tax benefit will go into effect. It's a simple, program that begins to put cyclists on the same footing as people who get similar tax breaks for commuting by transit or private automobile (parking fees), who have been receiving tax benefits for years.

Bicycle commuters will now be eligible to deduct $20 pretax per month from their paychecks to cover bicycling related expenses. Employers also receive tax benefits because they do't have to pay payroll taxes on the pre-tax funds deducted from employees' paychecks. . . .

Benefits to Employees
You finally get a chance to participate in pre-tax benefit for bicycling. It's about time! While the $20 isn't as much as your driving and transiting coworkers are eligible for, it's a good start. And because this is a pretax benefit, you'll save about 40% on every dollar that you use through this program by not paying taxes. And in some cases your employer may even provide some portion of the cash benefit themselves.

Benefits to Employers
You finally get to offer a pretax benefit for your employees who bike to work. And you'll save about 10% on every dollar that your employees deduct through this program because you won't have to pay payroll taxes.

What's Covered?
The intent of the legislation is to allow employees to use up to $20 a month in pre-tax dollars deducted from their paychecks to cover expenses related to an employee's bike commuting such as bike parking facilities, shower facilities, and maintenance, including tubes, tires, and other gear.
More here.