Illinois HB2735 amends the Illinois Income Tax Act to create a tax deduction for gratuities included in federal adjusted gross income.

HB2735 amends the Illinois Income Tax Act to introduce a tax deduction for gratuities that are included in the taxpayer's federal adjusted gross income. This deduction applies to taxable years beginning on or after January 1, 2026. The bill specifies that the deduction is exempt from certain provisions of Section 250. The deduction is limited to gratuities paid, accrued, or incurred directly or indirectly to a person who is not a related member, and the transaction must not have as its principal purpose the avoidance of Illinois income tax.

Illinois HB2735 amends the Illinois Income Tax Act to create a tax deduction for gratuities included in federal adjusted gross income.

HB2735 amends the Illinois Income Tax Act to introduce a tax deduction for gratuities that are included in the taxpayer's federal adjusted gross income. This deduction applies to taxable years beginning on or after January 1, 2026. The bill specifies that the deduction is exempt from certain provisions of Section 250. The deduction is limited to gratuities paid, accrued, or incurred directly or indirectly to a person who is not a related member, and the transaction must not have as its principal purpose the avoidance of Illinois income tax.