On July 28, 2023, Illinois Governor J. B. Pritzker signed into law the Transportation Benefits Program Act (the Act). The Act, effective January 1, 2024, requires “Covered Employers” to enact a pre-tax transportation benefits program that allows Covered Employees the ability to pay a for a transit pass with pre-tax dollars up to the amount determined by the IRS under 26 USC 132(f)(1)(B). In 2023, the monthly limit for excludable income used to purchase a transit pass is $300.
Who is considered a “Covered Employer” under the Act?
The Act applies to any individual, non-profit, government organization, or business association that employs or that “directly or indirectly, or through an agent or any other person, employs or exercises control over wages, hours, or working conditions of an employee” that is located in the following counties and townships:
- Cook County; Warren Township in Lake County; Grant Township in Lake County; Frankfort Township in Will County; Wheatland Township in 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.
In addition to being located in the above counties and townships, the employer must employ more than 50 “Covered Employees” at an address that is no more than one mile away from a fixed route transit service.
Who is considered a “Covered Employee” under the Act?
Covered Employees are employees that perform at least 35 hours of work per week on a full-time basis.
How can Covered Employers meet the program’s requirements?
Beginning on January 1, 2024, Covered Employers must offer Covered Employees the pre-tax transportation program benefit beginning on the first full pay period that falls 120 days after the start of employment. Employers can also meet this requirement by participating in programs offered by the Chicago Transit Authority or the Regional Transportation Authority.
Employer Action
Employers should determine whether they are a “Covered Employer” under the Program, and if so, should prepare to offer a compliant commuter benefits program to Covered Employees in anticipation of the January 1, 2024, compliance date.
Additional Resources
- Transportation Benefits Program Act
- Chicago Transit Authority Employer Program
- Regional Transportation Authority Employer Program
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog. © 2023 Sequoia Consulting Group. All Rights Reserved.
