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Lawmaker says adopting federal ‘no tax on tips’ would help workers

Illinois House Bill 4519 aims to exempt up to $25,000 in tips from state income tax, providing relief to tipped workers and encouraging economic growth, Rep. Deering said.

  • On this legislative cycle, House Bill 4519, filed by Deering, would exempt tips from Illinois state income tax up to $25,000, aligning with the federal 'No Tax on Tips' policy.
  • Framing the policy as relief, Deering said the measure would provide direct relief to tipped employees who earn a lower base wage and aims to retain Illinois' workforce and businesses while spurring growth.
  • Under Deering's proposal, the exemption would apply only to customer-provided tips while workers remain taxed on earned wages, with Deering calling tips `voluntary payments from customers`.
  • Facing opposition, Deering said Illinois officials previously stated they would not adopt the federal exemption, citing concerns about unequal tax burdens.
  • Framing it as competitive policy, Deering suggested the exemption would make Illinois more attractive and warn that losing people and businesses would drain state revenue.
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Lawmaker says adopting federal ‘no tax on tips’ would help workers

(The Center Square) – A growing debate over how tipped income is taxed in Illinois has resurfaced as state Rep. Regan Deering, R-Decatur, introduced legislation aiming to align Illinois law with the federal “No Tax on Tips” policy.

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Watauga Democrat broke the news in Calhoun, United States on Tuesday, February 3, 2026.
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