Legal — new tax/gratuity carve-out starting July 2026
Illinois has no general surcharge cap (a proposed 1% cap, HB 3128, did not pass). Starting July 2026, Illinois prohibits charging interchange fees on the tax and gratuity portions of a transaction if the acquiring bank is notified during authorization or settlement.
Illinois at a glance
| Credit card surcharge | Legal — new tax/gratuity carve-out starting July 2026 |
|---|---|
| Maximum surcharge | 3% (card network cap — no state percentage cap) |
| Debit & prepaid cards | Never — prohibited nationwide by federal rules and card networks, in every state |
| Cash discount / dual pricing | Legal — permitted in all 50 states with a compliant structure |
| State rule | No general surcharge cap; new tax/gratuity interchange carve-out effective July 2026 |
| Disclosure | Standard card network rules apply. The July 2026 tax/gratuity rule is a separate interchange-fee requirement, not a surcharge disclosure rule — confirm with your processor how it's implemented on your statement. |
What Illinois merchants need to know
Illinois considered and rejected a 1% surcharge cap (HB 3128 never passed), so the general surcharge framework in Illinois is the standard card network baseline: 3% practical cap, credit only, clear disclosure. Where Illinois gets genuinely distinctive is a separate rule taking effect in July 2026: interchange fees can no longer be charged on the tax and gratuity portions of a transaction, provided the acquiring bank is notified during authorization or settlement.
That rule is about interchange cost allocation on the processing side, not a surcharge rule in the traditional sense — but it affects the total cost calculation Illinois merchants should be running, especially in tip-heavy businesses like restaurants where gratuity is a meaningful share of the transaction. If you're in Illinois and haven't confirmed with your processor how they're implementing the July 2026 change, that's worth doing before then.
The cash discount alternative
Wherever surcharge rules get complicated, dual pricing doesn't: posting a card price and offering a discount for cash is legal in all 50 states when it's structured correctly — the posted price must be the card price, with cash receiving a true discount. The economics match a surcharge; the compliance profile usually beats it.
Illinois' new tax/gratuity interchange rule specifically benefits tip-heavy businesses regardless of whether you surcharge or use cash discount — it's worth understanding on its own alongside whichever pricing model you choose.
Common questions
Is it legal to charge a credit card fee in Illinois?
What is Illinois' new tax and gratuity rule?
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Surcharge rules in other states
Not legal advice. Surcharge and pricing laws change through legislation, court decisions, and enforcement positions. This page reflects our review as of July 2026 and is provided for general information. Confirm current requirements with your processor and qualified counsel before implementing any fee or dual-pricing program. This state is under active legal or legislative movement; we re-verify it quarterly.