Restaurant Labor Costs in Illinois
Illinois sets a minimum wage of $15.00 an hour and allows a tip credit of 40% of the applicable minimum, giving a minimum cash wage of $9.00 for tipped employees. Chicago runs its own ordinance separately from the state, so operators in the city work from different numbers than operators elsewhere in Illinois.
Figures verified July 2026
Statutory rates
| Rate | Per hour | Source |
|---|---|---|
| State minimum wage1 | $15.00/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
| Minimum cash wage (tipped employees)2 | $9.00/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
| Maximum tip credit | $6.00/hr | U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026 |
1 Chicago operates a separate city ordinance.
2 Tip credit is 40% of the applicable minimum wage.
Next scheduled change: 1 January 2027. Illinois rates are normally adjusted on 1 January.
On role-level pay data
The Bureau of Labor Statistics publishes Illinois medians by role, linked below. The statewide figure blends Chicago with the rest of Illinois, and the city's separate wage ordinance pulls those two apart.
From an hourly rate to a labor cost percentage
The rates above are what you may not pay below. What an hour costs you is larger, once the on-costs below are added, and the labor cost percentage calculator will turn the two halves into a figure you can compare. The prime cost calculator then tells you whether that number and your food cost together leave room for rent and profit.
Tips and tip handling
Illinois expresses its tip credit as a percentage rather than a fixed cash amount: employers may credit up to 40% of the applicable minimum wage, leaving a cash floor of $9.00 against the $15.00 state minimum. Because it’s proportional, the cash wage moves automatically whenever the minimum does. Chicago’s ordinance is separate, and the city has been phasing its own approach to tipped wages, so check the current city position if you trade there.
If you need to write this down for your team, the tip-out policy generator produces a plain-language policy document, and the tip-out calculator handles the nightly split.
What else drives your labor cost here
Chicago is effectively another jurisdiction
If you trade in the city, the state figures on this page are the wrong ones. Work from the Chicago ordinance, and if you run sites inside and outside the city, keep the two payrolls modelled separately.
A percentage credit moves on its own
Because Illinois expresses the tip credit as 40% of the minimum rather than a fixed cash amount, your tipped wage floor rises automatically whenever the minimum does. No separate announcement, no separate decision.
Payroll taxes and benefits
Employer payroll taxes, unemployment insurance and workers' compensation sit above gross wages. The National Restaurant Association's labor benchmarks include benefits, so a wages-only calculation isn't comparable to them.
For what your percentage should be measured against, see the cost benchmarks by type of food business.
Run your own numbers
Frequently asked questions
What is the minimum wage in Illinois?
$15.00 an hour statewide, with a minimum cash wage of $9.00 for tipped employees. Chicago operates its own separate ordinance.
How does the Illinois tip credit work?
It’s a percentage rather than a fixed amount: employers may credit up to 40% of the applicable minimum wage, so the tipped cash wage rises automatically with the minimum.
Is the minimum wage different in Chicago?
Yes. Chicago runs a separate city ordinance from the state, so check the current city rate if you trade there.
Labor costs elsewhere
- Restaurant Labor Costs in the United StatesFederal floor, the tip credit, BLS median pay by role, and the national benchmarks.
- Restaurant Labor Costs in MassachusettsA $15 floor with one of the larger tip credits in the north-east.
- Restaurant Labor Costs in ColoradoAn indexed state rate, a fixed tip credit, and a separate Denver ordinance.
Rates on this page are reproduced from the government sources listed below and were last checked on 20 July 2026. They are published for orientation and are not legal advice — before you set pay, confirm the current figure against the primary source for your jurisdiction, including any local ordinance that may exceed it. The headline rate at time of writing was $15.00 per hour.
Sources
- U.S. Department of Labor, Wage and Hour Division — Minimum Wages for Tipped EmployeesRevised 1 January 2026 · Government / statistical