Illinois Minimum Wage: Rates, Tip Credit, and Chicago

An owner of two coffee shops called me the week after a July payroll ran. Both stores were on $15.00 an hour, the Illinois state rate, and he had been paying that faithfully since the day it took effect. One store sits in DuPage County, west of the city, where $15.00 is the correct number. The other sits inside the Chicago city limits, where the rate had just moved to $17.05. He had underpaid a full shift roster by more than two dollars an hour and did not learn it from his payroll system.

That is the shape of the Illinois problem. The state number has not moved since the start of 2025 and nothing above it is published, so employers stop watching. Meanwhile Chicago and Cook County each run their own schedule, both adjust on July 1, and neither one announces itself in your payroll software. The state figure tells you nothing about what you owe in Logan Square or Schaumburg.

So this page is a rate sheet, not an essay. Every figure below comes from the Illinois Department of Labor, the City of Chicago, or Cook County, with the effective date attached. For paid leave, pay transparency, harassment training, and the rest of employing people here, use the Illinois HR compliance guide.

What You Owe Per Hour Right Now

The Illinois minimum wage is $15.00 an hour for workers 18 and older, and it has been since January 1, 2025. The Illinois Department of Labor publishes exactly three state figures: $15.00 standard, $9.00 tipped, and $13.00 for youth workers under a set hours cap. There is no fourth number.

Two coverage rules sit underneath that. The required state poster states that the minimum wage law applies to employers with 4 or more employees, and that domestic workers are covered even when the employer has only one worker. Below four employees, and outside domestic work, the state law does not reach you, though the federal wage and hour law may.

Those are the only local rates in Illinois. Chicago sets its own under the city code, Cook County sets its own for the rest of the county, and the rest of the state runs on $15.00. The local rate follows the place the work is performed, so a company headquartered in Peoria still owes the Chicago rate for hours its people work inside the city.

When the Next Increase Lands

No increase to the Illinois state rate is published. The step schedule that carried the state from $9.25 in 2020 up to $15.00 ended on January 1, 2025, and the state labor department's own published rate history lists $15.00 for both 2025 and 2026 with nothing above it. A further state increase takes a bill through the General Assembly.

The local rates are on a calendar instead. Chicago increases every July 1 by the consumer price index or 2.5 percent, whichever is lower, then rounds up to the nearest five cents. The city documented that calculation for the most recent step, which took the rate from $16.60 to $17.05 under the methodology codified at section 6-105-020(b)(1)(C) of the municipal code.

Cook County works from a comparison rather than a fixed formula. Each July 1 the county may set its rate to the greatest of the federal minimum, the Illinois minimum, or its own price index calculation, and the county rules block the price index calculation entirely in any year when the Cook County unemployment rate is 8.5 percent or higher. That last clause is why the county number can sit flat through a downturn while Chicago keeps climbing.

Practically, an Illinois employer with city or county exposure gets one predictable budget event every summer and one unpredictable one whenever Springfield acts. The state increase tracker covers how the other jurisdictions handle the same timing problem.

Tipped Cash Wage and the Tip Credit

Illinois allows a tip credit worth up to 40 percent of wages, which sets the cash wage at $9.00 an hour against the $15.00 state rate. The state poster carries the rule in one line: if an employee's tips combined with the wages from the employer do not equal the minimum wage, the employer must make up the difference.

Chicago runs a far smaller credit. The tipped cash wage there is $12.96 an hour, a credit of 24 percent against the $17.05 city rate, and the city has stated that the 24 percent credit holds for all employers through June 30, 2028. Cook County sets its tipped cash wage at $9.25 and measures the shortfall over any seven-day period, which is a tighter test than a monthly average.

The credit is not a rate. It is permission to count tips toward a floor you still owe, and the arithmetic gets rechecked every pay period rather than once at hire. A restaurant group with a city location, a suburban location, and a location downstate is running three separate tipped calculations off three different cash floors. The tipped wage guide walks through the weekly make-up math in detail.

Chicago and Cook County Rates

Chicago and Cook County are the two local minimum wage ordinances in Illinois. Each applies to work performed inside its boundary, so the rate travels with the job site rather than with your business address.

Chicago pays $17.05 an hour for employers with 4 or more employees, effective July 1, 2026, with a tipped rate of $12.96. Coverage is broader than most employers expect: the ordinance reaches any employee who works at least two hours in any two-week period inside the city. Domestic workers are covered regardless of employer size. Work performed under a city contract or concessionaire agreement carries a separate base wage of $18.50 an hour.

Cook County pays $15.40 an hour for non-tipped employees and $9.25 for tipped employees, also effective July 1, 2026. The county ordinance covers employers that employ anyone within county boundaries for at least two hours a week, including drivers and delivery staff passing through, and it applies only to employees over 18.

The Opt-Out Problem in Suburban Cook

Cook County home rule municipalities can decline the county ordinance, and many have. The county states plainly that certain municipalities have opted out, that the list changes frequently, and that employers should confirm with the local city, township, or village directly. Where a suburb has passed a minimum wage of its own, that municipal rate governs instead of the county one.

This is the one Illinois fact that cannot be answered from a table, and the county says so itself. If your worksite sits in suburban Cook County, call the village hall before you set the rate, and write the answer and the date in your payroll file so the next person does not have to call again.

Industry Carve-Outs and Exemptions

Illinois has no fast food minimum wage and no healthcare minimum wage. The state publishes one standard rate that applies across every industry, and the carve-outs run the other direction: instead of lifting the floor for one sector, they lift certain roles out of the overtime rule or out of the wage law entirely.

Two entries deserve attention. Agricultural labor is exempt from the Illinois overtime requirement, which is a narrower statement than being exempt from the minimum wage, and the two should never be treated as the same thing. Separately, the state licenses sub-minimum rates for learners and for workers with physical or mental limitations, and it has announced that on December 31, 2029 it will stop issuing and recognizing those licenses altogether.

No Illinois law sets a separate wage for quick service restaurants. That model belongs to other states, and the fast food wage rules quoted in national coverage are not this state's. A drive-through in Rockford pays the same $15.00 as the hardware store next to it.

Youth and Training Wage

Illinois runs both a youth rate and a 90-day training rate, and they stack differently by jurisdiction. The state rate for workers under 18 is $13.00 an hour, available only while that worker has logged fewer than 650 hours for you in a calendar year.

The 650-hour window is measured from the date of hire forward rather than from January 1. State guidance gives the example directly: a worker hired on April 30 has a window running to April 30 of the following year, and the day they cross 650 hours they move to the full $15.00 and stay there for as long as you employ them.

The separate training wage is simpler. An employee over 18 who does not receive tips may be paid $14.50 for the first 90 days with you, fifty cents under the standard rate. A tipped employee over 18 may be paid $9.00 during those first 90 days when you are applying the 40 percent tip credit, or $14.50 when you are not.

Chicago removed its youth discount at the last increase, so covered employees under 18 in the city now receive the full $17.05, as do all domestic workers. Cook County goes the other way and simply does not cover anyone under 18, which leaves the state $13.00 rule operating in the suburbs. The county does allow its own 90-day training wage of up to fifty cents below the county rate, and it excludes day, temporary, and seasonal workers from that reduction entirely.

Poster Requirements

Every Illinois employer posts Your Rights Under Illinois Employment Laws, the combined state notice that carries minimum wage, overtime, child labor, equal pay, paid leave, and rest period rules on a single sheet. The notice itself instructs that it be displayed in a conspicuous place on the premises where other notices are posted, and the state labor department distributes it free in English, Spanish, Polish, and Ukrainian.

Chicago and Cook County each add one. The Chicago Labor Laws Public Notice must be displayed at each city facility and also provided to every covered employee with their first paycheck and annually with a paycheck issued within 30 days of July 1, which makes it a payroll task rather than a break room task. Cook County publishes a Minimum Wage Ordinance notice to employers, reissued for each July 1 rate, in seven languages.

A poster showing last year's rate is the first thing an investigator photographs, and it turns a payroll question into a documented notice failure. Our guide to payroll recordkeeping covers what to keep alongside the posted notices and for how long.

How Illinois Sits Against the Federal Rate

The federal minimum wage is $7.25 an hour and has not moved since July 24, 2009, as the US Department of Labor state wage tables show. Illinois sits $7.75 above it, and Chicago sits $9.80 above it. Where both laws cover an employee, the higher rate wins, so $7.25 is not a number an Illinois employer pays on an ordinary shift.

The federal figure still matters in one place: the employee-count threshold. Illinois reaches employers with 4 or more employees, and Chicago tells employers under that count to follow the federal minimum wage requirements instead. An employee individually covered by the federal wage and hour law is owed $7.25 rather than nothing, and the coverage tests are worth reading before you assume you are outside both. The federal minimum wage guide lays those tests out.

What to Do the Day a Rate Rises

A rate change is a payroll project, not a memo. In Illinois the local increases arrive on a fixed date with a published number, so the work is entirely schedulable. Run it in this order every July, and again in January if the state moves.

The step employers skip is the last one. Keeping rate changes, employee notices, and signed acknowledgments together in one place is exactly the sort of small recurring task FirstHR was built to hold for teams without a dedicated HR person.

Frequently Asked Questions

What is the Illinois minimum wage right now?

It is $15.00 an hour for workers 18 and older, effective January 1, 2025, for employers with 4 or more employees. Domestic workers are covered even when the household employs one person. Chicago pays $17.05 for employers with 4 or more employees and Cook County outside Chicago pays $15.40, both since July 1, 2026. The local rate follows the place the work is performed.

Is the state rate going up next year?

Nothing above $15.00 is published. The step schedule that ran from 2020 ended on January 1, 2025, and the state rate history lists $15.00 for both 2025 and 2026. Local rates are different: Chicago adjusts every July 1 by the price index or 2.5 percent, whichever is lower, and Cook County may adjust on the same date to the greatest of the federal, state, or county figure.

How much can I count as a tip credit?

Up to 40 percent of wages statewide, which puts the cash wage at $9.00 against the $15.00 rate. Chicago allows only 24 percent, for a cash wage of $12.96, and the city has said that credit holds through June 30, 2028. Cook County sets $9.25. In every case the credit only stands if tips actually close the gap, and when they do not you pay the difference.

Do I pay the Illinois rate or the Chicago rate?

Whichever is higher for the place the work is performed. Chicago reaches any employee working at least two hours in any two-week period inside the city, so a suburban business with a regular city route owes the city rate for those hours. In suburban Cook County, check whether the municipality opted out of the county ordinance or passed its own, because the county says that list changes frequently.

Can I pay a teenager less than the full rate?

You may pay $13.00 an hour to a worker under 18 who has logged fewer than 650 hours for you in a calendar year, counted from the date of hire forward. Once they pass 650 hours the rate becomes $15.00 permanently. Chicago no longer allows a youth discount and requires the full $17.05, while the Cook County ordinance does not cover anyone under 18 at all.

Which poster do I have to hang?

Your Rights Under Illinois Employment Laws, in every workplace, displayed where your other notices are posted. Chicago employers add the Chicago Labor Laws Public Notice, which also has to go out with each covered employee's first paycheck and once a year with a paycheck issued within 30 days of July 1. Cook County employers post the county minimum wage notice for the current July 1 rate.

I have three employees. Am I covered?

The state minimum wage law reaches employers with 4 or more employees, and the required poster says so on its face. That is narrower than being exempt from everything. Domestic workers are covered at one employee, the federal wage and hour law runs its own coverage tests at $7.25, and the Cook County ordinance sets no employee-count threshold. Have an Illinois employment attorney confirm the count before you rely on it.