Commuter benefits compliance in Illinois (Chicago, Cook County, and the RTA region)

The Illinois Transportation Benefits Program Act took effect January 1, 2024. It applies to employers with 50 or more covered employees at a location within one mile of fixed-route transit. The covered areas are the six-county RTA region (Cook, DuPage, Kane, Lake, McHenry, and Will counties) and the Bloomington-Normal area. Those employers 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. The location must be in the counties and townships covered by the Act.

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 commuter benefit limit (§132(f)). 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 connects to ADP, UKG, Paylocity, Paycom, Paychex, Toast, Workday, and more than 25 other payroll systems, including those most common among 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. There is no up-front employer cost and no manual open enrollment to manage. Employees don't pre-fund. The employer keeps a reserve amount in its Alice plan account; it belongs to the employer and is not a fee.

Sources

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

Talk to sales

sales@thisisalice.com or (929) 552-4625.

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 by the IRS.

For the full list of eligible commuter expenses, see what parking and transit expenses are eligible. Eligibility is set by IRC §132(f).

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