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.
