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HB 1383

INC TX-DEDUCTION FOR TIPS

104th Regular Session Introduced by Jason Bunting and 23 co-sponsors

Illinois bill allowing state income tax deduction for tips paid to service workers to reduce taxable income obligations.

Added Co-Sponsor Rep. Wayne A. Rosenthal
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WeVote Research Nonpartisan
Bill Summary · HB 1383

Legislative bill overview

HB 1383 would allow Illinois taxpayers to deduct tips paid to service workers from their state income tax calculations. The bill appears designed to provide tax relief to individuals who regularly tip service industry employees, reducing their taxable income based on tip amounts.

Why is this important

Tips represent a significant portion of income for service workers in hospitality, food service, and related industries. This deduction could affect state tax revenue while potentially providing meaningful relief to taxpayers in middle and lower-income brackets who frequent tipping-based businesses regularly.

Potential points of contention

  • Revenue impact: The deduction could reduce Illinois state tax revenue; the fiscal cost depends on participation rates and average tip amounts claimed
  • Equity concerns: The benefit primarily flows to those who can afford to tip regularly, potentially favoring higher-income households over lower-income ones
  • IRS coordination: Federal tax law generally does not allow deductions for tips paid; state-level divergence could create complicated dual-filing requirements and potential audit confusion
  • Definition and verification: The bill's language on what qualifies as a "tip" and how amounts would be documented/verified is unclear without seeing full legislative text
  • Administrative burden: Implementation requires tax form modifications and potential compliance tracking mechanisms

Compiled from official sources — confirm details with the bill’s official record.

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