Illinois tipped wage ($9.00) and tips tax calculator
Illinois keeps tips fully taxable — its return begins with federal AGI and Schedule M has no subtraction for them — and it requires a $9.00 cash wage, 60% of the $15.00 minimum.
Why Illinois never sees the deduction
The IL-1040 starts with the adjusted gross income from your federal return. The tips deduction is subtracted later, on the way to federal taxable income, so it never reaches Illinois. Unlike some states, Illinois did not add a Schedule M line to bring it back, and no Illinois tips subtraction had been enacted for 2025 or 2026 when we checked.
Illinois figures
| Cash wage / minimum | $9.00 / $15.00 |
|---|---|
| In force | July 1, 2026 |
| Next change | none scheduled |
| Tipped threshold | Not specified |
| Tips on the 2025 return | tips stay taxable in this state. Illinois income starts from federal AGI and Schedule M has no subtraction for tips, so tips are taxed at 4.95%. Source: Illinois Department of Revenue |
| Tips on the 2026 return | tips stay taxable in this state. No Illinois tips subtraction had been enacted when we checked. Source: Illinois Department of Revenue |
A 40% cap on the tip credit
Illinois lets employers count tips for no more than 40% of the minimum wage — $6.00 an hour at $15.00 — so the cash wage is $9.00. Cities may set their own minimum wage and tip rules, so a Chicago worker should check the city ordinance as well.
A Peoria server
$15,000 of tips produce a $15,000 federal deduction and $1,750 of savings, but Illinois income still includes all of it. Thirty hours at $9.00 pay $270; with $130 of tips the worker is $50 below $450, owed by the employer.
Check an Illinois workweek
Where these figures come from
- Illinois Department of Revenue · Illinois Department of Labor
- 2025 Form IL-1040 instructions (2025)
- Minimum Wages for Tipped Employees (table by state) (2026-07-01)
Federal rules: how the deduction works. Nearby: Wisconsin, Iowa, Missouri, Kentucky, Indiana.
Figures verified against primary sources on