| Tax year 2026 | Tips | Overtime |
|---|---|---|
| Federal return (Schedule 1-A) | Deductible up to $25,000 | Premium deductible up to $12,500 ($25,000 joint) |
| Illinois state return | still taxed by the state | still taxed by the state |
Illinois requires the federal deductions to be added back.
The federal deduction still applies in Illinois
Whatever Illinois does, you can still claim the federal deductions on Schedule 1-A if you qualify. For example, in 2026:
- A single server with $40,000 of income and $15,000 of qualified tips saves about $1,730 of federal income tax.
- A single hourly worker with $60,000 of income and $4,000 of overtime premium saves about $480.
Social Security and Medicare still apply to tips and overtime in every state.
What to do
- Estimate your federal savings with the tips calculator or overtime calculator (your state is already selected).
- Check the official rules at the Illinois tax agency before you file your state return.
- See all 50 states.
Other states: California, Texas, Florida, New York, Georgia, Arizona, Nevada, New Jersey, Colorado, North Carolina, Pennsylvania.
Common questions
Does Illinois tax tips in 2026?
Yes. Tips are still taxed on the Illinois return.
Does Illinois tax overtime in 2026?
Yes. Overtime is still taxed on the Illinois return.
Can I still claim the federal deduction if I live in Illinois?
Yes. The federal tips and overtime deductions apply in every state, on Schedule 1-A of your federal return.
Sources
- Illinois state tax agency
- Tools Berry: Which states still tax tips in 2026 (updated Oct. 2, 2026)
- AP / PBS NewsHour: State tax returns and the tips and overtime breaks (Apr. 13, 2026)
- Clockspot: No tax on overtime by state (May 25, 2026)
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