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DBS Digest

Navigating employee benefits in an ever-changing regulatory landscape.

IL Transportation Benefits Program Act

The State of Illinois has enacted legislation which will require some employers in the Chicago metropolitan area to offer pre-tax commuter benefits to their employees as of January 1, 2024.

What benefits are included and how are they funded?

The Act does not require employers to provide funding, but will allow employees to use pre-tax dollars for the purchase of transit passes via payroll deduction. The costs may be excluded from the employee’s taxable wages and compensation up to the maximum amount permitted by federal tax law. Although not required by the legislation, employees may also contribute pre-tax dollars for work-related parking expenses at any qualified garage.

Which employers are subject to the Act?

Employers with 50 or more full-time employees located within the Regional Transportation Authority district – Cook County and 38 surrounding townships – will be required to offer their workers these new benefits. The business’ address must also be within one mile of a fixed-route transit service location (i.e. CTA Train / Metra Rail stations, CTA / Pace Bus stops, etc.).

How is the term “covered employee” applied?

Under this law, a “covered employee” is defined as any person who works an average of 35 or more hours per week. The benefit must be offered to all “covered employees” no later than the first full pay period after 120 days of employment.

What is the maximum amount employees can contribute to qualified transportation fringe benefits?

The current (2023) contribution limit is $300 per month for both transit and parking. The updated, inflation adjusted number(s) are expected to be published before the end of the year…historically in October or November.

The Windy City joins a handful of other urban locations across the U.S. with commuter benefit ordinances: Los Angeles, New Jersey, New York City, Philadelphia, San Francisco, Seattle and Washington DC.