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August 31, 2023

Illinois Passes Legislation Requiring Pre-Tax Commuter Benefits

Latia Murray
Latia Murray
Content Marketing Writer

What is the Transportation Benefits Program Act?

The State of Illinois recently passed the “Transportation Benefits Program Act” that will go into effect January 1, 2024, and require employers with 50 or more employees located in specific areas to offer a pre-tax commuter benefit to “covered employees.” Employees who take advantage of the benefit can use a pre-tax payroll deduction to pay for transit passes and avoid paying taxes for the deduction amount.

Which employers will be required to offer a commuter benefit?

Employers with 50 or more employees with an office located within 1 mile of the transit office in the following locations:

Cook County, Warren Township in Lake County, Grant Township in Lake County, Frankfort Township in Will County, Wheatland Township in Will 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, and Troy Township.

The Regional Transportation Authority will make a searchable map of addresses located within one mile of fixed-route transit service publicly available.

Which employees are defined as "covered employees" and will be required to have access to pre-tax commuter benefits?

A “covered employee” is defined as any person who performs an average of at least 35 hours of work per week for compensation on a full-time basis. This benefit must be offered to all employees starting on the employees’ first full pay period after 120 days of employment.

What is a pre-tax commuter benefit?

A pre-tax commuter benefit or Commuter Reimbursement Account (CRA) is an account that allows employees to set aside pre-tax money to pay for qualified work-related transportation expenses like the public transit passes mentioned in the bill.
A “covered employee” is defined as any person who performs an average of at least 35 hours of work per week for compensation on a full-time basis. This benefit must be offered to all employees starting on the employees’ first full pay period after 120 days of employment.

Is a CRA limited to transportation expenses?

Although not required by the” Transportation Benefits Program Act,” employees can also contribute pre-tax dollars to the CRA for work-related parking expenses.

How much can employees contribute to a CRA?

The 2023 CRA contribution limit is $300 for transit and $300 for parking. Every year, the IRS adjusts the annual limits for inflation, and the 2024 limits will be announced in the coming months.

Would the CRA be limited to the employee group defined in the bill?

No. Employers can extend the benefit to employees not outlined in the bill and can choose to offer it earlier than January 1, 2024.

For more information about Commuter Reimbursement Accounts, see our CRA Benefit Page.

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