Effective January 1, 2024, a new Illinois law called the Transportation Benefits Program (TBP) requires employers with 50 or employees in designated transit zones to provide transit benefits to their covered employees.
Employers subject to the law must give covered employees the ability to purchase transit passes (such as bus and train passes) through pre-tax payroll deductions for commuting to and from work. The pre-tax commuter benefit allows transit costs to be excluded from the employee’s taxable wages and compensation up to the maximum amount permitted by the federal tax law (26 U.S.C. 132(f)). A covered employer may comply with this Act by participating in a program offered by the Chicago Transit Authority or the Regional Transportation Authority.
Employers affected: The TBP defines a “covered employer” as an employer that employs 50 or more covered employees in a specified geographical area at an address that is located within one mile of fixed-route transit service location. The Regional Transportation Authority will make a publicly available searchable map of addresses that are located within one mile of a transit service location. The geographic area includes all of Cook County and numerous townships in surrounding counties. See full list below.
Covered Employees: Covered employees must be offered this new benefit. The law defines a “covered employee” as a person who performs at least 35 hours of work per week for compensation on a full-time basis. The benefit must become available no later than the first regular pay period after 120 days of employment. However, employers have the option to provide the benefit at an earlier date.
Maximum Amount: Transit costs may be excluded from the employee’s taxable compensation up to the federal law maximum amount. The maximum pre-tax transit amount is published by the Internal Revenue Service (IRS) each year. In 2023, the maximum amount is $300 per month. This number adjusts for inflation each year. The 2024 limit is expected to be published later this year.
Click here for your account set up guide.
Click here to read the Illinois Transportation Benefits Act (HB2068).
We will keep you updated with further information as it becomes available.
Covered employers are those located within one or more of the following 38 designated Illinois transit zones:
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