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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.
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