Everything You Need To Know About Getting to Work in Chicago

Chicago is a transit-rich city. Its primary transit system is the Chicago Transit Authority (CTA), the third-largest such system in the nation, which operates the city’s subway and buses. The CTA is also one of a growing number of big city transit systems that accept contactless bankcards, personal debit and credit cards, to pay fares onboard buses and at subway turnstiles.

The region is also served by one of the U.S.’s largest commuter rail systems, Metra, which provides convenient and frequent service into Chicago from the surrounding suburbs, and Pace, the suburban bus system, that offers connections to the CTA’s subway lines. Amtrak provides intercity services, and the South Shore Line operates commuter rail services from Indiana. Chicagoland is also home to a large bikesharing system, Divvy, and the Chicago Water Taxi.

Chicago shares the unfortunate distinction with New York City of having the worst traffic congestion in the nation. In order to help reduce congestion, Illinois now requires many employers in and around Chicago to allow their employees to use their pre-tax income to pay for their transit commutes. Read on to find out about the commuter benefit mandate and commuter benefits.

Does Chicago have a transit benefit mandate for employers?

Yes. Starting January 1, 2024 when the Transportation Benefits Program Act (TBPA) went into effect, most Chicago-area employers are now required to provide their employees with the opportunity to set aside a certain amount of their income pre-tax to cover transit commuting expenses.

Who is affected by the Transportation Benefits Program Act?

The TBPA applies to all employers who:

• Have 50 or more full-time employees.
• Are located within one mile of a “fixed route transit service” (searchable here by employer address)
• Do business as an individual, partnership, association, corporation, limited liability company, government, non-profit organization, or business trust.

Within those employers, the TBPA applies to employees who:

• Have been employed for 120 days.
• Work at least 35 hours a week.
• Receive compensation on a full-time basis.

Note that the mandate does not impact existing collective bargaining agreements. Agreements negotiated after the effective date of the mandate can waive the right to receive the benefit if the waiver is explicitly included in the agreement.

Read the full text of the Transportation Benefits Program Act.

What’s required of employers under the Transportation Benefits Program Act?

The TBPA provides that employers must offer eligible employees the pre-tax federal commuter benefit for transit expenses.   The federal law allows employees to use up to $325 a month (in 2025) to pay for eligible transit pass expenses. Transit pass expenses include any fare mechanism entitling a person to ride transit, including passes, tokens, fare cards, vouchers, or cash fares.

In Chicago, this includes passes or smartcards used for:

• CTA, Metra, and Pace (including joint or regional passes)
• Amtrak
• South Shore Line
• Chicago Water Taxi
• Via on-demand services

Pre-tax transit funds cannot be spent on:

• Divvy Bikeshare membership or individual Divvy rides
• Buying or maintaining a personal bicycle
• Taxis, Uber, Lyft or other ride-hailing services
• Parking, including at transit stations

Employers have the option to offer pre-tax parking as well, but it isn't required in Chicago.

Why are commuter benefits good for employers?

• Employers save on FICA taxes (7.65%) on the amount that their employees set aside on a pre-tax basis to pay for their transit.
  
  • For every $100 an employee sets aside to pay to ride the subway each month, the employer saves $7.65, or $91.80 a year.  For many employers, this can provide substantial savings annually.
• Pre-tax benefits make employers more competitive for top talent.
• Commuter benefits make employers more willing to embrace return-to-office mandates.
• Incentivizing transit usage reduces demand for parking, which can be expensive for employers to provide.
• Pre-tax transit benefits are a relatively low cost, high impact, and demonstrable commitment to carbon reduction and environmental sustainability. Jawnt can help you measure and report the carbon your organization is saving by supporting transit.

What transit benefits do Chicago employees most want?

To meet the minimum requirement of the mandate, employers only need to give their employees the option to set aside their own payroll funds for transit. But many employers chose to do more.

Popular transit benefit offerings include:

• Providing a monthly transit pass to the employee’s choice of transit agency. This could be CTA, Pace, Metra, South Shore Line, or Amtrak.
• Subsidizing the transit pass. Employers can fully subsidize their employees’ transit commutes tax-free up to $325 a month per employee, or they can share the cost by providing a partial subsidy—say $50 a month—and let their employees use their tax-free income up to $275 to pay for the remaining cost of their commutes.
• Streamlined payment. Although Chicago is served by multiple transit agencies, the CTA and Pace accept the Ventra Card, a contactless fare card, that can be used to ride either of these services. Employees can transfer their pre-tax transit funds to their Ventra Card and ride these services without admins having to wrangle individual agency rules. Employees who use Metra can use the Ventra app to purchase their passes on their phone using pre-tax funds.

Jawnt’s team of transit planners and benefit administrators are available to help you understand your options, requirements, and find a solution that will satisfy employers and employees alike. Drop us a line today to get started.

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