FAQ: Illinois minimum wage increase
The State of Illinois passed legislation in February 2019 raising the state’s minimum wage, in increments, to $15 per hour by 2025. For employees under the age of 18 working more than 650 hours in a calendar year, there is a lower rate of hourly wage increases.
| Date | Regular Minimum Wage | Youth Wage |
|---|---|---|
| January 1, 2020 | $9.25 | $8.00 |
| July 1, 2020 | $10.00 | $8.00 |
| January 1, 2021 | $11,00 | $8.50 |
| January 1, 2022 | $12.00 | $9.25 |
| January 1, 2023 | $13.00 | $10.50 |
| January 1, 2024 | $14.00 | $12.00 |
| January 1, 2025 | $15.00 | $13.00 |
Tax Credits
The bill also includes tax credits to help smaller businesses offset increased wages. Employers with 50 or fewer employees will be able to claim a tax credit corresponding to 25% of the increased cost of wages paid from January 1, 2020 through December 31, 2020.
This tax credit is then phased out over the course of the scheduled wage increases. It will reduce to 21% of the increased cost of wages in 2021, down to 17% in 2022, to 13% in 2023, then to 9% in 2024, and finally to 5% in 2025. The 5% credit will still be available for the year of 2026 for those employers with more than five employees and through 2027 for employers with no more than five workers.
Not all small businesses will be able to claim this tax credit. A business will not be able to claim the credit if its total average wages for employees earning less than $55,000 per year decreased when compared to the same period in the previous year. The tax credit is also limited to wages for employees who worked 90 or more consecutive days during the year.
See your tax accountant for further information.