The midfielder will officially complete his free transfer to Portman Road on July 1 and becomes Town's second signing of the summer after Cole Skuse.
Tabb spent the final two months of last season on loan at Ipswich and scored once in nine appearances, seven of which were starts.
The out-of-contract 29-year-old made a total of 105 appearances for Reading in a three-and-a-half-year spell at the Berkshire club, who have deemed him surplus to requirements following relegation from the Premier League.
Meanwhile, Ipswich are hopeful Paul Taylor will be fit for the start of pre-season training in under three weeks' time.
The striker broke a bone in his foot in September's 2-0 home defeat to Wolves, coming in what was only his third match since joining from Peterborough at the end of last summer's transfer window.
Taylor was forced to undergo surgery and duly missed the rest of last term but he has now stepped up his recovery while the rest of his team-mates are enjoying their summer break, and the 25-year-old is on target to return to the fold when Town report back for pre-season training in the last week of June.
Assistant physio Alex Chapman told the club's official website: "Tayls has been at the training ground virtually every day, working on his fitness with Lids (Andy Liddell, fitness coach).
"He's been doing a lot of running and is kicking a ball as well and hopefully he will be ready to join the rest of the lads for the start of pre-season."