McHenry Times

Illinois State Senator Craig Wilcox has introduced legislation aimed at providing a tax deduction for workers who rely on tips. Senate Bill 140, filed by Wilcox, proposes that tipped workers in Illinois receive a state income tax deduction equivalent to the amount of gratuities included in their federal adjusted gross income.

"When customers enjoy their experience at a restaurant or other service-oriented business, the tip is a gesture of appreciation for a job well-done," stated Wilcox. "It is not part of an individual’s base salary and therefore should not be treated as taxable income."

The proposed bill would require workers to report their tips on their tax returns; however, these earnings would be exempt from Illinois' 4.95% income tax rate. This initiative aligns with efforts seen at the federal level and in various states to eliminate taxes on tips.

"President Trump has expressed interest in removing taxes on tips, and some states are also taking steps to put 'no tax on tips' policies on the books," added Wilcox. "My SB 140 is pro-worker, pro-small business, and pro-taxpayer."

Wilcox believes this legislation could help address labor shortages within the restaurant industry by making tipped positions more financially attractive to potential employees.

The National Restaurant Association declared its support for "no tax on tips" policies in August 2024.