Chicago minimum wage in 2026

Chicago minimum wage: what is confirmed

2026 rate

Not confirmedcity notice not readable Oct 18, 2026

Tipped wage

Not confirmedphase-out schedule unverified

Effective

July 1 each yearlower of CPI or 2.5%

Illinois floor

$15.00an hour, 4+ employees

The last Chicago rates we read on the city's own minimum wage page were the July 1, 2023 figures, which show how the city structured them by employer size:

Do not pay from this table. The 2024, 2025 and 2026 increases all came after it, and news reports say a 2023 city ordinance began phasing out the tip credit, so the tipped column is likely out of date too.

Who the Chicago ordinance covers

Chicago's rate applies to work done inside the city. An employer based in Evanston or Oak Brook that sends staff into Chicago owes the city rate for those hours, and a Chicago company with a remote worker in Springfield pays that worker under the state rules. Record hours by location for anyone who moves between the city and the suburbs.

Suburban Cook County is a separate question. Cook County has its own ordinance, but many suburbs have opted out, and we could not read the county's pages to confirm its 2026 rate. The state's own floor is covered on the Illinois minimum wage page.

The tip credit phase-out

Illinois lets employers count tips toward up to 40% of the minimum wage, so the state tipped cash wage is $9.00 an hour in 2026. Inside Chicago, news and law firm reports (not official sources) say the city's One Fair Wage ordinance, passed in 2023, removes that credit in steps, and later reports say the schedule was slowed. We could not read the city's own notices to confirm the current tipped wage or the schedule, so check the BACP notice before setting server pay. Whatever the step, the rule that tips must bring every hour up to the full minimum still applies, and the employer covers any gap.

For contrast, tipped workers get the full rate with no credit in Seattle and Los Angeles, while New York City allows an $11.35 food service cash wage.

How the annual increase works

Each July 1 the city raises the rate by the change in the Consumer Price Index, capped at 2.5%. A year with 4% inflation still produces only a 2.5% raise; a year with 1.8% inflation produces 1.8%. Because the city adjusts in July and Illinois has announced no 2027 change, the gap between Chicago and the rest of the state widens a little each summer. The 2026 minimum wage table shows where Illinois sits among the states, and the federal minimum is still $7.25.

Payroll taxes on a Chicago hourly worker

Without a confirmed 2026 rate, here is the tax math per worker that you can apply to the rate on the city notice. For a full-time employee (2,080 hours) at hourly rate R, annual pay is 2,080 x R. A new Illinois employer then adds:

• FICA: 7.65% of pay, so $159.12 for each $1.00 of hourly rate over a full year.
• FUTA: 0.6% of the first $7,000 = $42.00.
• Illinois unemployment: 3.35% new employer rate (including the 0.55% fund building rate) on the first $14,250 = $477.38. Any full-time worker at Chicago's rate earns past that base.

At the state's $15.00 that comes to $31,200 in pay and $2,906.18 in taxes. Each dollar of hourly rate above $15.00 adds $2,080 in pay and $159.12 in FICA. Chicago has no city income tax to withhold. Registration with IDES and the Illinois Department of Revenue is in the Illinois payroll tax guide.

Setting up payroll for Chicago staff

Chicago employers need a July 1 rate change, a tipped wage that may change on its own schedule, and correct rates for staff who also work in the suburbs. Pick software that stores a work location per employee. Gusto Simple lists $49 a month plus $6 per person (checked October 16, 2026). See alternatives in our payroll software rankings and full-team costs in payroll pricing by team size.

Plug in the confirmed city rate with the employee cost calculator.