Illinois Enacts Transportation Benefits Program Act, Effective January 1, 2024

Gov. Pritzker recently signed Public Act 103-0291, known as the Transportation Benefits Program Act (the Act), which will require certain employers in specific geographic areas to provide pre-tax commuter benefits to covered employees.

Employers subject to this statute are those that employ 50 or more employees with an office located within one mile of the transit office within Cook County and in several townships in surrounding counties (please refer to the link to the Act for a full list of geographic areas). The Regional Transit Authority will publish a searchable map of addresses located within the designated areas prior to the effective date of the Act.

This benefit must be offered to all “covered employees” starting on the employees' first full pay period after 120 days of employment. Covered employees are those who perform at least 35 hours of work per week for compensation on a full-time basis for a covered employer within the designated geographic area.

Employers subject to the law must provide employees with the option to purchase transit passes on a pre-tax basis. The amount spent for this benefit may be excluded from the employee’s taxable wages and compensation, so the benefit must comply with Section 132 of the IRC. Note that Section 132 imposes a limit on the amount that can be paid pre-tax to $300 (for 2023, it is subject to annual cost-of-living adjustments). Employers can comply with this requirement by participating in a program offered by the Chicago Transit Authority or the Regional Transportation Authority.

Covered employers should be aware of the new law and begin working with their tax advisor or legal counsel concerning how to design a commuter benefit that complies with Section 132 to ensure compliance ahead of the January 1, 2024, deadline. Additional information or FAQs for employers may be released as we move closer to the law’s effective date.

Public Act 103-0291 »