Illinois could give tax credit to restaurants, bars for employee benefits

SPRINGFIELD (WGEM) - Illinois state lawmakers could pass a plan this year to help hospitality industry employers provide benefits for their workers. Owners and managers say it’s hard to recruit and keep employees right now because of better pay and benefits at big box stores.

Rep. Dave Vella (D-Rockford) wants to create a new income tax credit for employers at restaurants, bars, and hotels. He hopes this credit could cover 100% of the amount paid to provide vision, dental, life insurance, and short-term disability coverage for employees.

Rockford area restaurant and bar owners told Vella recently that they continue to have a hard time attracting job candidates, no matter how hard they try. Some explained they’ve raised wages for workers by nearly 40%, but it still has not been enough.

“I think we all saw during COVID that bars and restaurants got hit hard,” Vella said during a House Revenue hearing Thursday. “People aren’t going to bars as much; they’re drinking at home. People aren’t going out to eat much; they’re eating at home. Those are a cornerstone of our economy.”

The Illinois Licensed Beverage Association says this proposal would be a big help in a time of need. Under Vella’s plan, employers would only be able to receive the income tax credit if they could verify they provided the benefits to their employees.

Pete Gwizdala, president of the ILBA, owns Crazy Times Pub & Grill in Machesney Park and wants to provide those benefits to his workers, but it could cost him $24,000-$30,000 to cover all of his employees. Gwizdala says small business owners in his industry would truly appreciate any tax reduction they could receive. Still, he argues this is the right thing to do for hardworking employees and he’s willing to do it with or without the tax credit.

“A lot of them have insurance through the marketplace,” Gwizdala explained. “But then when they go to get dental or eye care, it’s an added extra cost to them.”

Gwizdala also noted that some of his employees are told they can’t have dental work done for a year without insurance. He says employees should have the option to receive benefits to go to a doctor without worrying about pre-existing conditions or long wait times.

The proposed tax credit would only be available during 2022. Vella said employers are in dire need of help and this plan could give them the extra financial boost.

“Knock on wood, we’ll be outside of the COVID pandemic issues and people will be going back to bars and restaurants,” Vella said. “The money could be flowing again. I just wanted to kickstart this process for employees.”

House Bill 4214 will need approval from the House Revenue Committee before moving on to the House floor for debate. Committee Chair Mike Zalewski (D-Riverside) moved the proposal to the Income Tax Subcommittee Thursday. However, all bills in the Revenue Committee must first move through a subcommittee for initial review.

“This will not be the last tax credit subject matter we’ll hear,” Zalewski said. “It’s a good start though.”

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