Article 11 — Commuter benefits compliance in Chicago and Cook County, Illinois

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Draft body

Commuter benefits compliance in Chicago and Cook County, Illinois

The Illinois Transportation Benefits Program Act took effect January 1, 2024. Employers with 50 or more covered employees located within one mile of fixed-route transit in the six-county RTA region (Cook, DuPage, Kane, Lake, McHenry, and Will counties), plus the Bloomington-Normal area, must offer a pretax transit benefit.

Who is covered

An employer is covered if it has 50 or more covered employees at a location within one mile of fixed-route transit service in any of the listed townships. A covered employee is an employee who averages at least 35 hours of work per week. Newly hired employees become eligible on the first full pay period after 120 days of employment.

What you must offer

You must allow covered employees to elect a pretax payroll deduction for transit expenses, up to the federal limit. In 2026 that is $340 per month for transit. The deduction must work on tokens, fare cards, vouchers, or similar items that allow the employee to use public transit.

What you do not have to do

• You are not required to subsidize the benefit.
• You are not required to offer pretax parking under this law (federal law allows you to, up to $340 per month in 2026).
• You are not required to enroll employees who decline.

How to comply

1. Identify covered employees by location and hours.
2. Pick a benefits administrator. Alice has connections to ADP, UKG, Paylocity, Paycom, Paychex, Toast, Workday, and 25+ others, including the systems most common in Chicago-area employers.
3. Notify covered employees of their option in writing.
4. Set up the payroll deduction code.
5. Keep records of offers, elections, and deductions.

Penalties

The Illinois Department of Labor enforces the Act. Failure to offer the benefit can result in citations and corrective orders. The Act provides for civil penalties tied to ongoing noncompliance.

What Alice does in Cook County

Alice runs the benefit end to end: card, payroll connection, employee communications, eligibility tracking, and reporting. No up-front employer cost. No manual open enrollment to manage. No employee pre-funding required and only a small reserve deposit from the employer.

Sources

• Illinois Transportation Benefits Program Act (820 ILCS 175)
• IRS Rev. Proc. 2025-32 (2026 inflation adjustments)
• Cook County government commuter benefits guidance

Get compliant in one call

Email sales@thisisalice.com or call (929) 552-4625. We'll get you onboarded in one call.

--- Specific benefits, election rules, and run-out periods depend on your employer's plan design. Check with your HR team or plan administrator for details.

Alice does not provide tax, legal, or financial advice. Consult your own tax preparer, lawyer, or financial advisor for guidance specific to your situation.

Figures shown are for the 2026 plan year and are set by the IRS. Limits are indexed annually; we update this article each November when the IRS issues the following year's Revenue Procedure.

For the full list of eligible commuter expenses, see "What parking and transit expenses are eligible?" at help.thisisalice.com/article/52. Eligibility is set by IRC §132(f).