Illinois Bill Would Require Companies to Offer Employees a Transit or Parking Benefit

A new bill would require companies to offer a transit or parking benefit to employees, but not all modes have equal benefits to a city. Photos: Erin Nekarvis (left), Steven Vance (right)
A new bill would require companies to offer a transit or parking benefit to employees, but not all modes have equal benefits to a city. Photos: Erin Nekarvis (left), Steven Vance (right)

Currently thousands of workers in Chicagoland have part of their wages set aside to buy a transit pass. This occurs before taxes are deducted from their paychecks, and thus saves them a few hundred bucks each year in income taxes. Not everyone can do this, but a new bill in the Illinois House of Representatives intends to increase access to this federal tax benefit, as well provide an alternative option for paying for transit.

Illinois House bill HB2802 would require that all employers in the Regional Transportation Authority’s service area – which is wherever the CTA, Pace, and Metra operate – offer the federal transit tax benefit to employees who work at least 10 hours per week. The employee could choose, however, to apply the pre-tax benefit to their monthly parking costs.

A second option in the bill is that employers can choose to pay directly for an employee’s transit pass or reimburse parking expenses. This is on par with the federal law that offers a pre-tax benefit to people who drive and pay for parking.

The transit pass benefit also applies to water taxi rides, Amtrak commutes, the South Shore Line, and ChicaGO Dash express bus service between Chicago and Valparaiso, Indiana. Current federal law allows up to $255 per month to be set aside before taxes are calculated, but the actual amount is based on the cost of the transit pass or parking cost incurred.

For many businesses, the federal tax benefit can be administrated through existing payroll services, and the RTA will help businesses enroll in a program today.

It’s a shame that this bill might force employers to start subsidizing car trips to work, which is a net loss for everyone in a city because of the additional pollution and crashes that would occur if more people drove. The bill could be improved improve if it was edited to include bike-share systems.

Right now the bill only covers “public transportation systems under the authority and jurisdiction of the Regional Transportation Authority,” which would exclude Divvy. Also under the bill, an employer can’t choose whether their employee takes a transit or a parking benefit – it’s up to the employee to decide which subsidy they want.

Check the Illinois General Assembly’s website to see if your state rep is supporting the bill.

wide banner fundraising ad

  • Kelly Pierce

    My employer offers commuter benefits and I use the program
    to save money on my taxes. Yet, making this an employer mandate would be
    another reason why people and businesses are escaping Illinois and its high
    taxes, costs and fees. I would much
    prefer to have more people employed than watch another business pack up and
    move out of state to leave behind the governmental burdens.

  • Kevin M

    Did you see the mention in the article of the RTA providing support to businesses to enroll, or that most Payroll services can already handle pre-tax transit benefit deductions?

    I’m all for this mandate. It seems unfair to me that most white-collar/professional jobs come with this compensation benefit while most lower-skill/pay jobs do not. Classism only works (for some) until the revolution!

  • It will likely be no cost to small businesses who already have managed payroll services. The state, on the other hand, says it would stand to lose nearly $180 million in lost income tax revenue.

    This rule wouldn’t apply to independent contractors.

  • Kelly Pierce

    I recognize that most employers are computerized and can
    direct their systems to add money to a Ventra card easily. To be clear though, the RTA will not
    reimburse the administrative expenses of the companies force to provide this service
    nor will it fully make available its employees to answer all employee questions
    about this mandated service. What really
    frosts me is that the mandate applies to anyone who hires someone for as little
    as 10 hours a week. For example, an
    elderly person hires someone part-time to assist them in housekeeping,
    shopping, meal preparation and lawn care. Under IRS rules, this individual
    would be an employee. The elder who fails
    to administer a transit benefits program for this single employee could then be
    subject to the penalties imposed on those who refuse to pay proper taxes. Why
    must the elderly be put through the big government ringer when they just want to
    hire a little help to be independent? Does
    anyone believe our current pro-business Republican governor would agree to
    this?

  • Jacob Lee

    If you read the text of the bill, it only applies to employers with 25 or more full-time employees. If you have 25 full-time employees, you probably have an HR person and the capacity to comply with regulations.

    (Even if that weren’t the case, I’m pretty sure a part-time in-home aide would be a contractor, 1099-style, not an employee.)

  • Kelly Pierce

    Thanks Jacob for finding the minimum number of employees in
    the bill. I missed it.

  • Jack Crowe

    There is a bicycle pre-tax benefit in the books, but a lot of employers that offer transit or parking benefits don’t provide the bicycle benefit. It would be nice if the bicycle benefit could be lumped in! After all, employees can only elect to reserve money for one of the three transit types per month.