Transportation Benefits Program Act Effective January 1, 2024
Oct 19, 2023
On July 28, 2023, Illinois Governor J.B. Pritzker signed into law Public Act 103-0291, known as the Transportation Benefits Program Act. Beginning January 1, 2024, covered employers will be required to provide a pre-tax commuter benefit to full-time employees who average at least 35 hours of work per week.
For purposes of the Act, covered employers are defined as those with 50 or more full-time employees (i.e., an employee who averages at least 35 hours of work per week), located within the six-county Regional Transportation Authority (“RTA”) region and at an address within one mile of fixed-route transit service, such as a CTA or Metra station, or CTA or Pace bus stop. The RTA has provided an interactive map on its website for employers to determine whether they are within the geographic region covered under the Act.
The benefit will allow employees to withhold up to the maximum amount permitted by federal tax law (i.e., Internal Revenue Code Section 132(f)) of pre-tax dollars for the purchase of a transit pass, via payroll deduction, with the costs for such purchases excluded from an employee’s taxable wages and compensation. The Act defines a “transit pass” as “any pass, token, fare card, voucher or similar item entitling a person to transportation on public transit.” This benefit must be offered to all covered employees starting on an employee’s first full pay period after 120 days of employment.
The RTA provides further guidance that riders with an existing transit benefits account may also purchase parking at any CTA, Metra, or Pace Park & Ride station, as well as other qualified parking garages.
For those employers with unionized workforces, the Act states that its requirements are not deemed to affect the validity or change the terms of bona fide collective bargaining agreements in place on January 1, 2024. The Act further provides that after January 1, 2024, its requirements may be waived in a collective bargaining agreement, but only if the waiver is set forth explicitly in such agreement in clear and unambiguous terms.
While the Act does not require employers to make contributions to an employee’s transportation benefits, implementing the Act’s requirements and offering a pre-tax commuter benefit option will be a shift for many employers. If you have any questions, please feel free to contact your Robbins Schwartz attorney.