CHICAGO—Illinois restaurant servers, bartenders, and other professional apologizers briefly celebrated the new federal “no tax on tips” provision before the state calmly tapped them on the shoulder and whispered, “Not for you, sweetheart.”
The federal change, part of the One Big Beautiful Bill Act, permits tipped workers to deduct up to $25,000 of tip income from federal taxes from 2025–2028. Experts estimate this will provide meaningful relief to millions of service industry workers, except the ones unlucky enough to reside in states that said “nah.”
Illinois, along with Maine and the District of Columbia, immediately rejected the idea, explaining that exempting tipped income would create “a significant loss in revenue,” which officials clarified would interfere with the state’s ongoing program of long-term tax disappointment.
“We looked at this proposal and asked ourselves one question: What if servers got slightly less crushed for like three years? And the answer was obviously: that seems fiscally reckless,” said a spokesperson for the Department of Revenue, sipping from a mug labeled “FULLY TAXED, JUST LIKE YOU.”
The announcement left many workers confused.
“I heard ‘no tax on tips,’ so I figured Illinois would do it too,” said local waitress Stephanie Nguyen. “But then I remembered this is the same state that taxed candy differently depending on whether it melts, so that was on me.”
Analysts warned that selective carve-outs can distort tax systems and create inequities between industries, because some people enjoy unnecessary suffering more than others.
“Only states that start with the federal definition of taxable income automatically include these exemptions,” explained senior policy analyst Manish Bhatt. “Illinois does not. Illinois starts with the emotional energy of a DMV employee and builds outward from there.”
Workers are urged to keep accurate records of tip income, not because Illinois wants to help them, but because Illinois would like to help itself.
Meanwhile, the state has rolled out an informational campaign urging servers to avoid confusion:
“No tax on tips”*
*Offer not valid in Illinois, Maine, or Washington D.C. Some restrictions apply. See hopelessness for details.
Residents are advised that if they want their tip income to be tax-free, their best options include:
- Relocating to a friendlier state
- Working in a non-tipped industry
- Faking their own death and being declared legally unpayable
The state’s move has been praised by budget hawks, economists, and at least one guy in Springfield who said “I don’t tip anyway so I don’t see the problem.”
For now, the dream of a tax-free tip culture ends at the Illinois border—where a highway sign reads, “Welcome to Illinois. Hope you weren’t counting on that.”