Illinois Minimum Wage vs Tipped Minimum Wage

Illinois Minimum Wage vs Tipped Minimum Wage: Key Takeaways

As of January 1, 2025, Illinois standard minimum wage is $15.00/hour, while the tipped minimum wage is $9.00/hour, representing 60% of the standard rate.
Employers can apply a tip credit up to 40% of the minimum wage, ensuring tipped employees’ combined wages and tips meet at least $15.00/hour.
Chicago's minimum wage rates are higher with a scheduled phase-out of the tipped minimum wage by July 1, 2028.

Understanding the differences between Illinois' minimum wage and tipped minimum wage is crucial for both employees and employers to ensure compliance. See server minimum wage for industry context.

This guide clarifies the current wage structure, tip credit rules, and regional variations within Illinois. Compare restaurant wages by state.

1. Overview of Illinois Minimum Wage and Tipped Minimum Wage

Illinois established a phased increase to reach a standard minimum wage of $15.00 per hour as of January 1, 2025.

Tipped employees receive a lower base wage of $9.00 per hour, which is 60% of the full minimum wage. Review the server job description to understand typical tipped duties.

The difference between the standard and tipped wage can be covered by tips through a tip credit allowance.

2. Tip Credit and Its Application in Illinois

Employers may take a tip credit up to 40% of the minimum wage, translating to a maximum of $6.00 per hour.

This means the base wage for tipped employees ($9.00) plus their tips must total at least the $15.00 minimum wage.

If tips do not bring earnings to the $15.00 minimum wage, the employer must make up the difference.

For planning and forecasting, check tipping percentages by state.

Employer Mandates for Tipped Employees

Ensure tipped employees' combined base wage and tips meet the legal minimum wage.
Monitor tip earnings and cover any shortfalls promptly.
Provide clear communication about wage structures to tipped employees.

When advertising roles, use best practices for jobs for tipped employees.

3. Differences in Minimum Wage Rates in Chicago and Cook County

While Illinois sets statewide minimum wages, local rates may be higher and have unique provisions.

In Chicago, starting July 1, 2025, non-tipped employees must be paid $16.60/hour for employers with 4+ employees.

Tipped employees in Chicago receive a base wage of $12.62/hour, with the city phasing out the tipped minimum wage by eliminating the tip credit in 8% increments annually until July 1, 2028. See the bartender job description for a common tipped role affected.

Cook County's rates typically align with the state minimum wage, but many municipalities there have opted out of the county ordinance, resulting in variable local rates.

Chicago Phase-Out of Tipped Minimum Wage

This phase-out plan gradually eliminates the tip credit, moving tipped wage closer to the full minimum wage.

The goal is to eventually pay tipped employees the full minimum wage before tips, increasing wage stability for these workers. Explore cocktail server pay for wage benchmarks.

4. Special Rules for Youth Workers Under 18 in Illinois

Youth workers under 18 who work fewer than 650 hours annually have a minimum wage of $13.00 per hour.

After exceeding 650 hours, their wage must increase to the full state minimum of $15.00 per hour.

This tiered approach balances entry-level job opportunities with fair compensation over time.

For entry-level front-of-house roles, review server age requirements.

5. Ensuring Compliance with Illinois Minimum Wage Laws

Employers must stay updated on wage rates and legally compliant tip credit calculations. Reference waitress pay rates to set expectations.

Keeping accurate records of wages and tips is critical for audit readiness.

Failure to pay full minimum wages, including making up tip shortfalls, can lead to penalties and legal issues.

Best Practices for Employers

Regularly track employee earnings, including tips, to verify total compensation meets or exceeds minimum wage.
Communicate wage policies, including tip credit rules, clearly to all employees.
Monitor local ordinances for changes to minimum wage and tip credit rules, especially in municipalities like Chicago.

6. Conclusion: Illinois Minimum Wage vs Tipped Minimum Wage

Illinois distinguishes between standard minimum wage and tipped minimum wage rates to balance fair worker compensation with the realities of tipped occupations. For FOH hiring, see the hostess job description.

The tip credit mechanism allows employers to pay a lower base wage while ensuring employees' total earnings meet the $15.00 wage floor.

Local changes, especially in Chicago, reflect ongoing efforts to raise tipped workers' wages closer to parity with non-tipped employees.

Understanding these distinctions and compliance requirements is essential for employers and workers alike.

7. Useful Resources for Illinois Minimum Wage Information

01. What is the standard minimum wage in Illinois as of 2025?

The standard minimum wage in Illinois as of January 1, 2025, is $15.00 per hour.

02. How does the tip credit work for tipped employees in Illinois?

Employers can take a tip credit up to 40% of the minimum wage, allowing them to pay tipped employees a base wage of $9.00 per hour as long as total wages and tips meet or exceed $15.00 per hour.

03. When is Chicago phasing out the tipped minimum wage?

Chicago is phasing out the tipped minimum wage with a yearly 8% reduction in tip credit until it is fully eliminated on July 1, 2028.

04. What are the special rules for youth workers under 18 in Illinois?

Youth workers under 18 who work fewer than 650 hours annually must be paid at least $13.00 per hour, increasing to the full $15.00 minimum wage after surpassing 650 hours.

05. What records must employers keep to ensure compliance?

Employers should maintain accurate records of wages and tips to verify compliance with minimum wage laws and tip credit requirements.