Understand Illinois’ Transportation Benefits Program Act

New regulations in Illinois spell big changes for many in-state employers. In July of 2023, the Illinois General Assembly passed the Transportation Benefits Program Act, mandating that employers who meet certain criteria must offer tax-advantaged benefits to employees commuting via public transit.

The Program goes into effect January 1, 2024, so employers need to act quickly. 

Here are four important takeaways employers in Illinois should know.

1. Which employers does the Act impact?

Individuals, partnerships, associations, corporations, limited liability companies, governments, non-profit organizations, and business trusts must comply with the Transportation Benefits Program Act—if they meet all qualifications:

  • Number of employees: At least 50 covered employees
  • Oversight: Direct or indirect control over employee wages, hours, or working conditions
  • Location: An address within a mile of a fixed-route transit service in any one of the areas listed on the Illinois General Assembly’s website

Unsure of whether you fall within the boundaries? Look out for The Regional Transportation Authority’s searchable map of addresses within a mile of fixed-route transit.

2. What type of commuter benefits do employers have to offer?

The Act mandates that affected Illinois employers offer pre-tax commuter benefits to eligible employees. The commuter benefits, known as Commuter Reimbursement Accounts (CRAs), allow employees to use a pre-tax payroll deduction to pay for public transit—including:

  • Public transit tokens
  • Fare cards
  • Vouchers
  • Passes

The deduction amount can be subtracted from their taxable income, up to the limit specified by federal tax law.

3. Which employees are eligible for pre-tax benefits?

“Covered employees” who meet the following criteria can tap into the new benefits:

  • Full time: Employees engaged on a full-time basis.
  • Weekly hours: Employees who work at least 35 hours per week on average.
  • Compensation: Employees who are paid for their work.

Eligible employees can access these pre-tax benefits on their first full pay period after 120 days of employment.

4. How can Health Account Services from First American Bank help?

As businesses expand their benefits to meet new legislation and provide more attractive job offerings, First American Bank’s Health Account Services can ease the transition with personalized support and fully integrated commuter plans:

Stackable chip debit cards: With a stackable Mastercard® issued by First American Bank, employers can split employee transactions across multiple plan designs—including CRAs—in real time and at the point of sale.

Commuter Reimbursement Accounts (CRAs): Our experts can customize and implement CRAs as quickly as seven to ten business days.  

Benefits platform: Our team can provide an accessible benefits platform to support employer compliance goals and provide positive employee experiences across all plan types.

With branches across Illinois, Wisconsin and Florida, First American Bank offers valuable business and personal banking solutions. First American Bank’s Health Account Services team is dedicated to helping employers craft benefits offerings that support employee retention and seamless management. Whether implementing Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), Health Reimbursement Accounts (HRAs), or CRAs, our Health Account Services Team combines the knowledge of seasoned experts and modern technology to enable digital access, full plan oversight, and regulatory compliance.

The Transportation Benefits Program Act goes into effect on January 1, 2024. Start your preparations today with First American Bank.
Contact our Health Account Services experts

The information is for educational purposes only. It is not legal, financial, or tax advice. For legal, financial, or tax advice, you should consult your own legal counsel and tax and investment advisers.

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