New Illinois Law on Pre-Tax Transit

On July 28, 2023, the state of Illinois enacted the Transportation Benefits Program Act. This legislation mandates employers within Cook County and designated areas to provide their full-time employees with the option to purchase transit passes using pre-tax dollars. The law will be implemented starting January 1, 2024.

Important Dates:

• July 28, 2023 – Gov. J.B. Pritzker signed the new transit benefit requirement into law.
• Jan. 1, 2024 – The new transit benefit requirement takes effect.

Covered Employers and Employees

Employers are covered by the law if they employ at least 50 workers within one mile of fixed-route transit in Cook County or 37 townships listed in the law.

The program covers all full-time employees who work an average of at least 35 hours per week.

Transportation Benefit Requirement

Under the new law, covered employers must provide a pre-tax commuter benefit to covered employees that allows the employees to use pre-tax dollars to purchase a transit pass via a payroll deduction. The benefit must allow the cost of the transit pass to be excluded from the employee’s taxable wages and compensation up to the maximum amount permitted by federal tax law, consistent with 26 U.S.C. 132(f).

Employers may meet their obligation by participating in a program offered by the Chicago Transit Authority or the Regional Transportation Authority.

The transit benefit must be offered to employees starting on their first full pay period after 120 days of employment.

Employer Resource

The law tasks the Regional Transportation Authority with creating a searchable map of addresses located within one mile of fixed-route transit service.

This Legal Update is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2023 Zywave, Inc. All rights reserved.