(The Center Square) – Legislation to eliminate the tip credit in Illinois is moving through the General Assembly.
The House Executive Committee recently approved House Bill 2982 which will eliminate the state tip credit by 2027. The bill includes a recent amendment to offer a $1.50 tax credit per hour per employee for employers who choose to forego the tip credit before it is eliminated. The 120,000 servers and bartenders in Illinois work a total of approximately 180 million hours per year.
“If everyone used that $1.50 tax credit, it would cost the state $277 million,” said Sam Toia, president of the Illinois Restaurant Association. “It’s going to be a lean budget this year, I’m not sure they have $277 million to spend on this.”
Proponents of the measure, including the group One Fair Wage, argue the bill would provide wage stability and reduce poverty, particularly for women and people of color.
In 2023, the Chicago City Council voted to eliminate the tipped wage, raising the minimum wage for tipped workers from $9 an hour to $15.80 before tips. The plan will be phased in over five years.
Toia said a large majority of service workers are against eliminating the tipped wage.
“We did a survey with the National Restaurant Association and 86% of tipped restaurant servers believe they will earn less if the tipped credit is eliminated, and 87% of tipped employees believe the current system works and does not need to be changed,” said Toia.
Toia said if the legislation becomes law, there will be layoffs in the industry and higher costs at the table for consumers.
Protect Illinois Hospitality, a coalition of tipped workers, chambers of commerce, service operators and local small businesses, has voiced support for keeping the tip credit available for Illinois businesses.
“Eliminating the tip credit would fundamentally alter the earning potential of tipped workers in restaurants, bars, breweries, hotels, and other businesses. It would also mean higher prices for customers, job loss for workers, and have a devastating impact on local business owners,” the group said in a statement.
