Under new federal laws, qualified tips and overtime pay are exempt from federal income tax, but Illinois will still tax them. Workers must add those exempt tips back onto their state returns, a change a policy analyst warns could cause confusion.
Manish Bhatt, Senior Policy Analyst with the Tax Foundation, said taxpayers who are seeing and hearing about the no tax on tips at the federal level might not think about having to actually add those back into their state return.
Illinois remains a high-tax state, with one of the nation’s highest property tax burdens. Bhatt acknowledges that is may be difficult to persuade a tipped worker, already facing rising tax pressures, that opting out of the exemption is sound policy.
Bhatt said Illinois should instead pursue broad-based reform that benefits all taxapayers–not just certain groups.
Story from Illinois Radio Network
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