Illinois Tipped Minimum Wage: 2026 Rates, Chicago, and Rules

The Illinois tipped minimum wage is $9.00 per hour in 2026, which is 60 percent of the state’s $15.00 standard minimum wage.¹ Your employer can pay that lower cash rate only if your tips bring your total hourly pay up to at least $15.00. If they don’t, the employer owes you the difference. Chicago and suburban Cook County set their own, higher rates, and Chicago is phasing out the tip credit entirely by 2028.

Statewide Rate for 2026

The Illinois Minimum Wage Law (820 ILCS 105) lets employers pay tipped workers 60 percent of the standard minimum wage and count the remaining 40 percent as a tip credit.² With the standard wage at $15.00 per hour since January 1, 2025, the tipped cash wage is $9.00 per hour, and the tip credit is $6.00. No further increase is scheduled for 2026, so those figures hold all year.³

To claim the credit, the employer must produce substantial evidence that you actually received the claimed tip amount during the pay period.² If they can’t, the full $15.00 applies for every hour worked.

Workers under 18 have a lower standard minimum wage under the same statute, and the 40 percent tip credit applies against that lower rate. Check with the Illinois Department of Labor for the current under-18 figure.

Chicago Tipped Wage and the Phase-Out

Chicago runs its own minimum wage, and it’s currently eliminating the tip credit on a five-year schedule. As of July 1, 2025, the Chicago minimum wage for employers with four or more workers is $16.60 per hour, and the tipped base wage is $12.62 per hour.⁴

The credit shrinks by eight percentage points each July:⁵

July 1, 2024: credit capped at 32% of the Chicago minimum wage
July 1, 2025: capped at 24%
July 1, 2026: capped at 16%
July 1, 2027: capped at 8%
July 1, 2028: credit eliminated; tipped workers earn the full Chicago minimum wage

On July 1, 2026, the credit drops to 16 percent of the Chicago minimum wage as it stands then.⁶ Chicago adjusts its minimum wage each year based on the Consumer Price Index, so the exact 2026 dollar figure won’t be final until the city publishes its updated rate closer to July. These city rules apply within Chicago city limits and override the state’s 40 percent credit.

Suburban Cook County Rate

Suburban Cook County outside Chicago sets its own minimum wage. As of July 1, 2025, the county’s tipped rate is $9.00 per hour and its standard rate is $15.00 per hour.⁷ The county adjusts annually using whichever calculation is highest among federal, state, and CPI figures.

One thing to check: some municipalities within Cook County have opted out of the county ordinance and follow state rates instead. The list changes, so confirm with your village or township clerk which rate applies where you work.⁷

Who Counts as a Tipped Employee

Federal law defines a tipped employee as someone in a job that customarily and regularly brings in more than $30 a month in tips.⁸ Illinois’s statute uses broader language: an occupation where tips have “customarily and usually constituted” part of the employee’s pay.² Servers, bartenders, and valets qualify. Dishwashers and line cooks typically don’t, because their roles don’t produce customer tips.

Side Work and Second Jobs

Tipped employees regularly do work that doesn’t itself produce tips: rolling silverware, wiping tables, restocking. Under the federal “dual jobs” principle, if you work in two genuinely separate occupations for the same employer, the tip credit applies only to hours in the tipped occupation.⁸ A server who also works scheduled shifts as a prep cook should be paid the full minimum wage for the prep cook hours. Most disputes turn on whether a task is a supporting duty within a tipped job or actually a separate non-tipped job.

Overtime for Tipped Workers

Overtime for tipped employees in Illinois is calculated from the full minimum wage, not the lower cash rate.⁹ The employer can still subtract the same dollar tip credit, but the starting point must be $15.00.⁸

The 2026 math: $15.00 times 1.5 is $22.50 per overtime hour. Subtract the $6.00 tip credit, and the employer’s cash obligation is $16.50 per overtime hour. This is one of the most common payroll errors in tipped industries. If your overtime rate is calculated from $9.00 instead of $15.00, you’re being underpaid.

Tip Pooling Rules

Tip pools are legal in Illinois, but federal law limits who can participate. Managers, supervisors, and owners with at least a 20 percent equity stake cannot keep any part of pooled tips, even if they personally waited on customers.¹⁰ A “manager” for this purpose meets the executive duties test: someone who regularly directs at least two full-time employees and has real authority over hiring or firing.

Employers taking the tip credit can only require pooling among employees who customarily receive tips. Before claiming the credit, the employer must tell each tipped employee the direct cash wage, the tip credit amount, and the fact that all tips belong to the employee except for valid pool contributions.⁸ Skipping that notice wipes out the employer’s right to claim any tip credit.

Service Charges Are Not Tips

A mandatory service charge added to the bill is not the same as a tip. The IRS uses a four-factor test: a payment counts as a tip only if the customer paid it freely, chose the amount without restriction, wasn’t subject to an employer policy dictating the amount, and could decide who receives it.¹¹ The automatic 18 or 20 percent charge on large-party checks fails that test.

When money is classified as a service charge, whatever the employer distributes to you counts as regular wages, not tips. The employer cannot count it toward the tip credit, and it flows through normal payroll.

If Your Tips Don’t Reach $15.00

If your cash wage plus actual tips fall short of $15.00 per hour in a pay period, your employer must pay the difference. The math happens at the pay-period level, not shift by shift, so a strong Saturday can offset a slow Tuesday within the same period.

The penalties for not paying that difference are heavy. Under 820 ILCS 105/12, an employee who files a civil action can recover three times the underpayment, plus 5 percent of the underpayment for every month it stays unpaid, plus attorney fees and court costs.¹² A $500 shortfall becomes $1,500 before the monthly penalties even start.

Willful, repeated, or reckless underpayment also draws an administrative penalty of up to 20 percent of the underpayment, plus a flat $1,500 payable to the Department of Labor’s Wage Theft Enforcement Fund.¹³ You can file a claim with the Illinois Department of Labor or sue directly. The statute of limitations is three years for private actions and five years for claims brought by the Department.

Keep your own daily record of tips. A phone note with the date, shift hours, and tip total is enough, and it’s your best evidence in any dispute.

Deductions and Credit Card Fees

Employers cannot withhold wages for unreturned uniforms, tools, or other company property.¹⁴ To charge for a uniform at all, the employer needs a written agreement signed at the time of the deduction. For recurring deductions, the agreement must state the per-period amount and let you cancel voluntarily. Deductions cannot push effective pay below the minimum.

Illinois also prohibits credit card companies from charging interchange fees on the tip portion of a transaction. Under the Interchange Fee Prohibition Act (815 ILCS 151), issuers and payment networks cannot assess swipe fees on the gratuity amount if the merchant transmits the tip data separately at authorization or settlement.¹⁵ Your employer should not be passing card processing costs on your tips back to you.

Reporting Your Tips

If you receive $20 or more in cash tips from a single employer in a calendar month, you must report the total to that employer by the 10th of the following month.¹⁶ The report needs your name, Social Security number, and the total. You can use IRS Form 4070 or a system your employer provides. Credit card tips the employer distributes to you and amounts you get through tip-sharing both count toward the $20 threshold.

Even if your monthly tips fall under $20 and don’t need to be reported to your employer, you still owe income tax on every dollar. All tip income, including non-cash tips such as event tickets, belongs on your individual return. If tips went unreported to your employer, use Form 4137 to calculate the Social Security and Medicare tax owed.¹⁶

1
Illinois Department of Labor. Minimum Wage Law
2
Illinois General Assembly. Illinois Code 820 ILCS 105 – Minimum Wage Law
3
Illinois Department of Revenue. 2026 Schedule WC-I Withholding Income Tax Credits Information
4
City of Chicago. Minimum Wage Information
5
City of Chicago. Chicago Minimum Wage Ordinance
6
City of Chicago. Chicago Minimum Wage Ordinance
7
Cook County Government. Minimum Wage Ordinance and Regulations
8
U.S. Department of Labor. Fact Sheet 15 – Tipped Employees Under the Fair Labor Standards Act
9
Illinois Department of Labor. Minimum Wage/Overtime FAQ
10
U.S. Department of Labor. Fact Sheet 15B – Managers and Supervisors Under the Fair Labor Standards Act and Tips
11
Internal Revenue Service. Revenue Ruling 2012-18
12
Justia. Illinois Code 820 ILCS 105 – Minimum Wage Law
13
Illinois General Assembly. Public Act 103-0182
14
Illinois Department of Labor. Deductions From Pay FAQ
15
Illinois General Assembly. Interchange Fee Prohibition Act
16
Internal Revenue Service. Tip Recordkeeping and Reporting