Time to Prepare for the New Year: Illinois’ Pre-Tax Commuter Benefits Law Goes into Effect in 2024
Beginning on January 1, 2024, pursuant to House Bill 2068, Illinois employers located across thirty-eight (38) counties and townships will be required to provide employees with a “pre-tax commuter benefit.” This is one of a number of new Illinois laws impacting employers going into effect at the start of the new year.
House Bill 2068 covers employees who work an average of at least thirty-five (35) hours per week for compensation on a full-time basis. An Illinois employer must provide the necessary “pre-tax commuter benefit” if it: (1) is located in either 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, or Troy Township; and (2) employs fifty (50) or more covered employees, (a) in a location listed in (1), and (b) at a location within one mile of a fixed-route transit service.
Covered employers are required to provide covered employees with pre-tax commuter benefits allowing employees to use pre-tax dollars for the purchase of a transit pass. The costs related to such a purchase must be excluded from an employee’s taxable wages and must be in an amount up to the federal limit ($315 per month for 2024). Covered employers must provide this benefit to covered employees beginning in the first full pay period following an employee’s initial 120 days of employment. Covered employers may comply with this requirement by participating in a program offered by the Chicago Transit Authority or the Regional Transportation Authority.
Illinois joins a small number of states and localities, including New Jersey, New York City, New York, Los Angeles, California, and Philadelphia, Pennsylvania, requiring employers to provide transportation benefits to their employees. While the law does not specify the consequences of noncompliance, covered Illinois employers should begin to take steps to ensure they are prepared to comply with the law’s requirements by the January 1, 2024 effective date.
