Must you offer pre-tax transit passes for employees?

Under federal law, employers can allow employees to purchase monthly transit passes on a pre-tax basis up to a set dollar limit ($300/month in 2023). The employee isn’t taxed on wages used for this purpose, and there are no employment taxes on these pre-tax amounts. Starting January 1, 2024, a new Illinois law mandates that certain employers offer this benefit. This law applies to “covered employers,” which are those operating in the City of Chicago and surrounding areas that employ at least 50 employees who work at least 35 hours a week. Again, employees pay for the benefit, but it must be offered. #IdeaoftheDay