Illinois passed the Transportation Benefits Program Act on July 28, 2023, which requires all covered employers to provide a commuter benefit whereby an employee can elect to exclude the purchase of transit passes from taxable income, up to the maximum level allowed by federal law under IRS Section 132.
What is it? A bill that requires certain IL employers to provide covered employees with a pre-tax commuter benefit for transit passes.
Which employers must comply? Employers with at least 50 covered employees in certain geographic areas, at an address located within one mile of a transit service location. Here are those geographic areas:
- All of Cook County
- Warren & Grant Township in Lake County; Frankfort & Wheatland Township in Will County; Addison Township, Bloomingdale Township, York Township, Milton Township; Winfield Township; Downers Grove Township; Lisle Township; Naperville Township; Dundee Township; Elgin Township; St. Charles Township; Geneva Township; Batavia Township; Aurora Township; Zion Township; Benton Township; Waukegan Township; Avon Township; Libertyville Township; Shields Township; Vernon Township; West Deerfield Township; Deerfield Township; McHenry Township; Nunda Township; Algonquin Township; DuPage Township; Homer Township; Lockport Township; Plainfield Township; New Lenox Township; Joliet Township; or Troy Township
Who is a covered employee? Any person who performs an average of at least 35 hours of work per week for compensation.
When must the commuter benefit program be offered?
For new employees, the benefit must be offered starting on the employee’s first full pay period after 120 days of employment.
For current employees, the commuter benefit program must be offered starting January 1, 2024.
When is it effective? January 1, 2024
Do covered employers have to contribute to the commuter benefits? No, the law does not require IL employers to contribute or fund the commuter benefits.
What if an employer already offers a commuter benefit program to employees in Cook County and the other 37 townships in IL? If the commuter benefit program currently offered also satisfies the eligibility and federal limits in the IL Transportation Benefits Program Act, then the current commuter benefit program will suffice.
How can an employer comply? Covered employers can set up a commuter benefits program with certain TPAs offering such a product. Additionally, the Chicago Transit Authority (CTA) or the Regional Transportation Authority may offer programs that satisfy the requirements of the new IL commuter benefit act. We anticipate more information posted on such programs later in the year.
For more information on how to implement a commuter program, we recommend contacting your broker representative.
