Illinois (IL) benefits mandate and tax program
The Illinois Transportation Benefits Program Act, launched in 2024, is a statewide mandate that requires employers with 50 or more employees to offer commuter or transit benefits to their workforce. The program is designed to reduce traffic congestion, lower air pollution, and encourage the use of sustainable transportation options such as public transit and vanpools. Additionally, it provides tax savings for both employees and employers by allowing pre-tax payroll deductions for commuting expenses, making alternative transportation more accessible and affordable.
Covered employee:
Any person who performs an average of at least 35 hours of work per week for compensation on a full-time basis.
Covered employer:
An employer that is located in one of the geographic areas shown on the map below; and employs 50 or more covered employees at a worksite within those areas and within one mile of a fixed-route transit service.
All covered employers are required to provide a pre-tax commuter benefit to their covered employees. They may comply using one of the following options:
- Pre-tax benefit: Offer a program consistent with Section 132(f) of the Internal Revenue Code that allows employees to set aside pre-tax wages to cover the cost of transit passes, up to the maximum amount permitted under federal law.
- Public program: Participate in an approved commuter benefits program offered by the Chicago Transit Authority (CTA) or the Regional Transportation Authority (RTA).
Want to know more about compliance requirements in Illinois, or want to start offering commuter benefits to your employees?
Financial penalties in Illinois are assessed on a case-by-case basis and can reach up to $6,000 in the first year. Repeat offenses result in even higher fines, escalating every 30 days. For larger companies, these violations can quickly result in substantial financial penalties, making non-compliance an expensive and serious risk.
For Illinois, the nationwide IRS tax-free limits for commuter benefits apply. For 2025, employees can allocate up to $325 per month for transit and $325 per month for parking, reducing taxable income.
- Pre-tax savings: Employees can lower their taxable income by setting aside funds for transit and vanpool expenses.
- Employer tax benefits: Businesses save an average of 7.65% per employee on payroll taxes.
- Direct transit subsidies: Employers can provide up to $325 per month per employee in tax-deductible transit benefits.
- Additional incentives: Some cities and states offer grants, tax credits, or subsidies for implementing commuter benefit programs.
The mandate spans across 38 counties and townships in Illinois: Addison, Algonquin, Aurora, Avon, Batavia, Benton, Bloomingdale, Deerfield, Downers Grove, Dundee, DuPage, Elgin, Frankfort (Will County), Geneva, Grant (Lake County), Homer, Joliet, Libertyville, Lisle, Lockport, McHenry, Milton, Naperville, New Lenox, Nunda, Plainfield, Shields, St. Charles, Troy, Vernon, Warren (Lake County), Waukegan, West Deerfield, Wheatland (Will County), Winfield, York, Zion.
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