Overview: Illinois has enacted legislation that will increase the state’s minimum wage in several phases and provide small employers with a tax credit.
Effective Date: See below.
Details:
General Minimum Wage:
The minimum wage for adults will increase as follows:
· $9.25 per hour on January 1, 2020.
· $10 per hour on July 1, 2020.
· $11 per hour on January 1, 2021.
· $12 per hour on January 1, 2022.
· $13 per hour on January 1, 2023.
· $14 per hour on January 1, 2024.
· $15 per hour on January 1, 2025.
Youth Minimum Wage:
For workers who are under 18 years old and have worked 650 or fewer hours for the employer, the minimum wage will be as follows:
· $8 per hour beginning January 1, 2020.
· $8.50 per hour beginning January 1, 2021.
· $9.25 per hour beginning January 1, 2022.
· $10.50 per hour beginning January 1, 2023.
· $12 per hour beginning January 1, 2024.
· $13 per hour beginning January 1, 2025.
Tax Credit:
To help small employers adjust to the increases, the law establishes tax credits for reporting periods 2020 through 2026. To be eligible for the tax credits, employers must have 50 or fewer full-time equivalent employees during the reporting period and meet certain other requirements.
For 2020, the maximum tax credit is generally 25 percent of an employer’s increased compensation costs within Illinois as a result of the minimum wage increase. The maximum tax credit is reduced to 21 percent for 2021, 17 percent in 2022, 13 percent in in 2023, 9 percent in 2024, and 5 percent in 2025 and 2026. The law gives employers with five or fewer employees one additional year to claim the tax credit. For 2027, the maximum tax credit for these employers is 5 percent of the increased compensation costs due to the minimum wage increase.
Action Required: Illinois employers should ensure compliance with the new minimum wage requirements and post an updated minimum wage poster when it becomes available.
Please contact your dedicated service professional with any questions.
This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.