Below you will find a summary of new laws at the federal, state, Cook County, and Chicago levels.

Please note:

• The following information is provided as a membership service for restaurant operators, and is not intended as legal or professional advice or counsel.
• Any local, state, or federal rules, regulations, or laws summarized are subject to change.
• The Illinois Restaurant Association strongly encourages readers to consult with their attorney or competent professional prior to taking action based on the following information.

FEDERAL

One Big, Beautiful Bill Act

This bill includes several tax provisions that affect the restaurant industry, such as:

• Pass-through tax deduction: Makes the 20% qualified business income deduction permanent.
• Full expensing for capital equipment: Extends 100% bonus depreciation permanently so that restaurants can immediately write off new capital investments rather than slowly depreciating over years.
• Business interest deduction fix: Reinstates the original business interest expense limitation formula (based on EBITDA rather than EBIT) on a permanent basis. Capitalization would not be included as business interest.
• Shift meals deduction protected: Clarifies that free or discounted employee meals remain deductible under IRC §274(e)(8).

Click here to read the full text of the One Big, Beautiful Bill Act.

National Restaurant Association Resources

The National Restaurant Association launched a dedicated "One Big, Beautiful Bill" webpage to help operators and employees make the most of the new tax laws. It’s designed to be a one-stop resource hub with resources such as:

• Tax Reform Overview – Industry-specific insights on how these changes impact operations.
• Tax Reform Operator Checklist – A quick-start guide to help operators begin conversations with their tax professionals.
• Tax Reform Social Media Toolkit – Ready-to-use graphics and post copy to help spread the word online.

Click here to access the NRA’s resources regarding the “One Big, Beautiful Bill” Act.

No Tax on Tips/Overtime

The No Tax on Tips and No Tax on Overtime provisions were passed as part of the "One Big, Beautiful Bill". Both took effect in tax year 2025 and expire at the end of 2026. No Tax on Tips is capped at $25,000 per year, while No Tax on Overtime is capped at $12,500 per year.

The National Restaurant Association has created a handout for operators and employees with the latest info and guidance on how to prepare to file for the deductions in April 2026. 

Click here to access the No Tax on Tips Overview handout.

Click here to access the No Tax on Overtime Overview handout.

Guidance for Individuals Who Received Tips

The Department of the Treasury and IRS issued guidance for workers eligible to claim the deduction for tips and for overtime compensation for tax year 2025.

Notice 2025-69 PDF clarifies how workers can determine the amount of their deduction without receiving a separate accounting from their employer for cash tips or qualified overtime on information returns such as Form W-2 or Form 1099, as those forms remain unchanged for the current tax year. It also provides transition relief to workers who receive tips in the course of a specified service trade or business.

The IRS website also includes example scenarios to help workers determine their deductions.

Click here to access guidance from the IRS and Treasury Department for individuals who received tips or overtime during tax year 2025.

Eligible Positions

The Treasury Department issued a preliminary list of nearly 70 eligible positions across the following categories:

• Beverage and Food Service
• Entertainment and Events
• Hospitality and Guest Services
• Home Services
• Personal Services
• Personal Appearance and Wellness
• Recreation and Instruction
• Transportation and Delivery

Click here to see the preliminary list of occupations eligible for No Tax on Tips.  

Qualified vs. Not Qualified Tips

The IRS has also clarified the difference between qualified and not qualified tips. According to the IRS:

• Qualified tips must be paid in cash or an equivalent medium, such as check, credit card, debit card, gift card, tangible or intangible tokens that are readily exchangeable for a fixed amount in cash, or another form of electronic settlement or mobile payment application (excluding most digital assets) denominated in cash.
• Qualified tips must be received from customers or, in the case of an employee, through a mandatory or voluntary tip-sharing arrangement, such as a tip pool.
• Qualified tips must be paid voluntarily by the customer and not be subject to negotiation. Qualified tips do not include some service charges. For instance, in the case of a restaurant that imposes an automatic 18% service charge for large parties and distributes that amount to waiters, bussers and kitchen staff; if the charge is added with no option for the customer to disregard or modify it, the amounts distributed to the workers from it are not qualified tips.
• Any amount received for illegal activity, prostitution services, or pornographic activity is not a qualified tip.

Click here to read the definition of qualified tips on the IRS website.

Penalty Relief for No Tax on Tips/Overtime Filings

The Department of the Treasury and the IRS issued guidance providing penalty relief to employers and other payors for tax year 2025 regarding new information reporting requirements for cash tips and qualified overtime compensation.

Notice 2025-62 PDF provides penalty relief from the new information reporting requirements for cash tips and qualified overtime compensation under the "One Big, Beautiful Bill" to employers and other payors for not filing correct information returns and not providing correct payee statements to employees and other payees.

Specifically, employers and other payors will not face penalties for failing to provide a separate accounting of any amounts reasonably designated as cash tips or the occupation of the person receiving such tips. In addition, employers and other payors will also not face penalties for failing to separately provide the total amount of qualified overtime compensation.

The relief is limited to returns and statements filed and provided for tax year 2025 and applies only to the extent that the person required to make the return or statement otherwise files and provides a complete and correct return or statement.

Click here to read guidance from the IRS and Treasury Department on penalty relief for tax year 2025 for information reporting on tips and overtime.

New National Threshold for Hemp Products

Congress has passed legislation that established a new national threshold for hemp products. Under the new law, no more than 0.4 mg of total THC per container is permitted. This change will ban sales of hemp-derived items, like drinks, that exceed the new limit. The new ban will go into effect on November 12, 2026.

Click here for the full text of the law creating a new national threshold for hemp products.

STATE

Celiac Disease and Gluten-Free Food Training

This bill requires food handlers to complete a training program on celiac disease and the safe handling of gluten-free food. This law goes into effect on January 1, 2026.

Please note: The ServSafe certification classes already meet this requirement.

Click here to read the full amendment to the Food Handling Regulation Enforcement Act.

Cocktails-to-Go

This bill permanently permits the sale of cocktails and mixed drinks for delivery and curbside pickup. It includes safeguards such as strict container requirements and age verification.

Click here to read the full amendment to the Liquor Control Act of 1934.

Human Trafficking Recognition Training

Anyone who works at a lodging establishment, restaurant, or truck stop who has recurring interactions with the public will be required to complete human trafficking recognition training within six months of being hired and every two years after. This law goes into effect on January 1, 2026.

Click here to read the full amendment to the Lodging Services Human Trafficking Recognition Training Act.

Click here to access FREE human trafficking recognition training from the Illinois Department of Human Services.

Interstate Fee Prohibition Act Extension

The date to comply with the Interchange Fee Prohibition Act (IFPA), which eliminates credit card "swipe fees" on sales taxes and gratuity, has been extended. Instead of going into effect on July 1, 2025, the IFPA will now go into effect on July 1, 2026.

Click here to read the full amendment to the Interchange Fee Prohibition Act.

Minimum Wage

In the State of Illinois, the minimum wage will remain $15 for non-tipped workers and $9 for tipped workers.

Click here for more information about the State of Illinois' Minimum Wage Law.

Mobile IDs

The Illinois Secretary of State has issued new guidance on mobile IDs, which are now available in Illinois. Businesses can download and use the Illinois Mobile ID Check app to verify the age of customers presenting mobile IDs.

The Illinois Liquor Control Commission issued a letter with information about accepting mobile IDs. Notably, a customer cannot simply "show" their ID as proof of age; it needs to be verified, such as through the ILSOS Mobile ID Check app.

Click here for more information on the Illinois Mobile ID Check app.

Click here to read the letter from the Illinois Liquor Control Commission with guidance for accepting mobile IDs.

No Tax on Tips/Overtime

The State of Illinois has opted out of the No Tax on Tips and No Tax on Overtime deductions. This means that tips and overtime pay are still subject to the full state income tax.

Click here for information on income tax rates in Illinois.

Nursing Mothers in the Workplace Act

The Nursing Mothers in the Workplace Act requires employers to provide paid break time to nursing mothers so they may express or pump breast milk for their child. This law goes into effect on January 1, 2026.

Click here to read the full text of the Nursing Mothers in the Workplace Act.

Restaurant Reservation Anti-Piracy Act

The Restaurant Reservation Anti-Piracy act bans third-party restaurant reservation services from promoting or selling reservations for a restaurant without a written agreement from the restaurant to do so. This law goes into effect on January 1, 2026.

Click here to read the full text of the Restaurant Reservation Anti-Piracy Act.

Restrictions on AI Use in Hiring

An amendment to the Illinois Human Rights Act now prohibits an employer from using artificial intelligence that has the effect of subjecting employees to discrimination on the basis of protected classes or using zip codes as a proxy for protected classes with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure or terms, privileges, or condition of employment. This law goes into effect on January 1, 2026.

Click here to read the full amendment to the Illinois Human Rights Act.

Sales Tax

Effective January 1, 2026, certain taxing jurisdictions have imposed a local sales tax or changed their local sales tax rate on general merchandise sales. These local sales taxes are referred to in this bulletin as “locally imposed sales tax.”

The following taxes are affected:

• business district sales tax;
• home rule municipal sales tax; 
• Metro-East Mass Transit District (MED) sales tax; and
• non-home rule municipal sales tax.

To verify your new combined sales tax rate, go to the MyTax Illinois Tax Rate Finder at mytax.illinois.gov and select rates for January 2026.

In addition, the $55.2 billion Fiscal Year 2026 State Budget made the following change to sales taxes: businesses that do business of $100,000 or more within the state are now subject to state sales tax, not just those with a physical presence in the state. This goes into effect on January 1, 2026.

Click here for tax resources on out-of-state sales.

COOK COUNTY

Minimum Wage

The minimum wage for Cook County will remain $15 for non-tipped workers and $9 for tipped workers.

Click here for more information about the Cook County Minimum Wage Ordinance.

CHICAGO

Fiscal Year 2026 Budget

The Chicago City Council's 2026 budget includes the following:

• No head tax
• No property tax
• No increase to garbage fees
• Legalizing video gaming terminals
• Increasing the personal property leasing tax to 15%
• Taxing off-premise liquor sales at 1.5%. This excludes bars and restaurants.
• Increasing plastic bag fees to 15 cents per bag
• Selling advertising on bridge houses, light poles, and fleet vehicles
• Expanding the downtown area where rideshares are charged congestion surcharges

Click here to read more about the 2026 Chicago City Budget.

Minimum Wage

Currently, the minimum wage is $16.60 for non-tipped employees and $12.62 for tipped employees. On July 1, 2026, there will be an increase according to the Consumer Price Index or 2.5%, whichever is lower.

Click here for more information from the Department of Business Affairs and Consumer Protection on the minimum wage.