State Representative Elizabeth “Lisa” Hernandez filed new legislation to eliminate the tip credit in Illinois.

HB 2982 would phase out the tip credit, reducing it to 20% on July 1, 2025, further reducing it to 10% on July 1, 2026, and fully eliminating it on July 1, 2027. It would require employers to pay tipped workers the regular state or local minimum wage, whichever is higher.

Under current law, tipped workers are required to receive the full minimum wage, but the employer may credit tips for up to 40% of that wage rate.

The legislation, by eliminating the tip credit and raising the minimum wage for tipped workers, would put additional strain on independent and family-owned restaurants across the state after years of inflation and rising costs.

Similar legislation was introduced last year, but, after a contentious House committee hearing, it failed to advance out of the House. NFIB filed written testimony on the proposal.

The current minimum wage in Illinois is $15 per hour, the highest in the Midwest.