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Illinois Transit Benefits: An Overview for Employers

Written by Team FBPCPA

December 5, 2023

Transit Benefits

The modern workplace is continually evolving, with more and more companies adopting practices that prioritize the welfare and satisfaction of their employees. The Transit Benefits Program gives businesses an easy benefit to offer employees.

For those companies that have over 50 employees working an average of 35 hours per week for compensation on a full time basis, it will be mandatory under certain conditions starting January 1, 2024. For those with less than 50 employees, you are still able to participate. You can read more about the program below.

Mandatory Compliance for Illinois Employers with Over 50 Employees

With the rapid growth of public transit usage and the increasing emphasis on sustainable practices, the State of Illinois has taken a significant step in promoting the use of public transit among its workforce. The Transit Benefits Program Act, recently passed by the state, has some crucial implications for businesses operating within Illinois, especially in the six-county RTA region.

What does the Transit Benefits Program Act entail?

Eligibility Criteria: Businesses that have over 50 full-time employees (Averaging 35 hours per week or more), and the business is located within 1 mile of a fixed-route transit service, fall under the purview of this Act. This means that if you’re an employer fitting this criteria, you’re now mandated to offer your employees the benefits of a pre-tax transit program.

New Employees: The Act ensures that all new hires are eligible to avail of these benefits after 120 days of employment. This move ensures that even the newest members of your team can reap the benefits of the program and enjoy a more affordable commute.

Deadline: The Transit Benefits Program Act comes into effect on January 1, 2024. Employers are expected to ensure compliance by this date. If you are in the Chicagoland area, you can sign up through Ventra here.

Easy Compliance: The State of Illinois, recognizing the potential administrative burden on businesses, has provided a seamless solution. Employers can easily comply with the requirements of the Act by enrolling in the no-cost Ventra Transit Benefits Program or through their local transit authority. This program, tailored for both large corporations and small businesses, lets employees earmark up to $300 of their pre-tax income every month for transit expenses.

Transit Benefits At a Glance for All Employers Including Those With Less than 50 Employees

The Transit Benefits Program is an employer-sponsored benefit program tailored to assist employees with their commuting expenses. By allowing employees to use pre-tax dollars to pay for their transit rides, this program not only facilitates commuting but also makes it more economical.

Based on the federal tax law, specifically Internal Revenue Code Section 132(f) “Qualified Transportation Fringe,” this program caps at $300 per month or $3,600 annually. The primary goal behind this initiative is to promote the use of public transit as an eco-friendly and sustainable mode of transportation, reducing carbon footprints and decongesting urban areas.

Benefits for Everyone

  • Employees: Save on income tax as pre-tax income up to $300 per month is set aside for commuting expenses.
  • Employers: Provide an attractive, non-monetary benefit to employees, enhancing job satisfaction and retention.

Employer FAQs

What Exactly is the Transit Benefits Program?

A tax-free benefits program created by the IRS, allowing employers to help their employees with commuting costs.

How Does It Work?

Each month, the pre-elected transit value or pass load is provided to the employees. The aggregate of this amount is debited from the company’s bank account.

Any Minimum Employee Requirement?

No. Even if you have just one employee, you can avail of this program. However, if you have 50 or more employees, working an average of 35 hours per week or more, it is mandatory that you offer this program if your business is located within 1 mile of a “fixed-route transit service”, please see above.

Can It Benefit Employees Using CTA, Pace, and Metra?

Absolutely. The Ventra system covers all these transit systems.

Where to Check Current Monthly Tax-Free Limits?

The IRS website is the most reliable source. The current

Is There Automatic Benefits Renewal?

Yes, employees can set up a recurring reorder with their transit provider. In the Chicagoland area, Ventra manages everything post-setup unless a change or suspension is required.

What About Tax Records?

This program is devoid of the complexities of FSAs. No detailed record-keeping or special IRS reporting is necessary.

Is There a Fixed Time to Enroll or Make Changes?

Enrollment can happen anytime. However, changes in employee elections can only occur between the 5th and 20th of every month for the subsequent month for Ventra customers. You need to contact your transit provider if you are outside of the Chicagoland area. Employers with over 50 employees must sign up before January 1 2024. Here is the link to sign up for Ventra.

Can Cash be Redeemed from Transit Benefits?

No. Refunds, if any, are credited only to the employer.

The Transit Benefits Program is an innovative solution for employers aiming to offer value-added benefits to their workforce. In an era where sustainable practices are gaining importance, this program not only benefits the employees and employers but also contributes to environmental well-being. If you need help navigating this benefit for your employees, please contact us.

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