Treasury Secretary Scott Bessent said the Illinois General Assembly’s decision not to adopt provisions of the One Big Beautiful Bill Act exempting tips and overtime means workers will continue paying state taxes on income that is deductible at the federal level.
In a Dec. 10 press release, Bessent said Illinois and other Democratic-led states are effectively preventing workers and families from receiving federal tax relief.
“President Trump’s tax cuts bill is the most pro-worker, pro-family legislation in a generation,” Bessent said. “It puts more money directly into the pockets of hardworking Americans through No Tax on Tips for dedicated service industry staff, No Tax on Overtime for linemen and factory workers, and a new tax deduction for seniors who depend on Social Security.”
Under the OBBBA, eligible workers may deduct up to $25,000 in qualified tips or overtime from federal taxable income for tax years 2025 through 2028. The tip deduction applies only to voluntary tips and to IRS- and Treasury-approved occupations that regularly receive tips, including food service, hospitality, personal services, and transportation. A separate provision allows a partial deduction for overtime pay under similar income limits.
In Illinois, the provisions most directly affect an estimated 86,200 waiters and waitresses and more than 100,000 app-based drivers, including roughly 85,000 in Chicago who work for companies such as Uber and Lyft, according to Bureau of Labor Statistics estimates.
More than 576,000 manufacturing workers, as well as other employees who regularly work overtime, are also affected, according to the Illinois State University Census Data Center.
State law requires taxpayers to add back any federal deductions for tips or overtime, keeping those earnings fully taxable in Illinois. Democratic lawmakers have said adopting the federal provisions would create a revenue shortfall for the state.
Bessent said Illinois is among several states that have decoupled from the federal worker-focused tax cuts.
“In a blatant act of political obstructionism, liberal strongholds like Colorado, New York, Illinois, and the District of Columbia are deliberately blocking their own residents from receiving these historic benefits at the state level,” Bessent said. “This partisan stonewalling is a direct assault on the very families and workers liberal politicians claim to champion. By denying their residents access to these important tax cuts, these governors and legislators are forcing hardworking Americans to shoulder higher state tax burdens, robbing them of the relief they deserve and exacerbating the financial squeeze on low- and middle-income households.”
Since Gov. J.B. Pritzker took office in 2023, per-resident tax collections in Illinois have increased 44%, from $2,790 to $4,030, according to Illinois Policy. Median-income households are estimated to owe about $13,099 in combined state and local taxes in 2025, more than 16.5% of their income and roughly 52% above the national average.
Illinois has enacted 49 tax increases under Pritzker and continues to raise taxes, including a $482 million increase in the proposed 2026 budget, despite collecting $717 million more than expected in 2025.
The state has also experienced slow economic growth, corporate departures, and population loss. Illinois has lost more than 420,000 residents to domestic outmigration since 2020, according to Census and state data.
Bessent said the issue is about fairness and economic growth.
“President Trump’s vision is clear: real relief for the forgotten men and women of America, certainty for businesses, and momentum for growth,” he said. “We call on these holdout states to immediately conform and stop punishing their citizens for partisan games. Treasury stands ready to work with any state committed to delivering on that promise, but we will not stand idly by as this obstructionism drags down the national recovery. This is about fairness. This is about opportunity. And this is about putting America first, starting with the families and workers who make our economy the envy of the world.”
