Determination engine

Which state do you actually withhold in?

Reciprocity, convenience-of-the-employer, nonresident thresholds and unemployment localization, applied together to one employee's facts. Every answer cites the state source it came from.

Withhold Iowa income tax.

Illinois and Iowa have a reciprocal agreement, so the work state stands down once the exemption certificate is on file.

Income tax withheld to

Iowa

Flat 3.8%

Employee certificate

IL-W-5-NR

Employee's Statement of Nonresidence in Illinois

Unemployment insurance

Illinois

Localized under factor 1: Localization.

Reciprocal agreement

Yes

Illinois exempts Iowa residents.

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File IL-W-5-NR with the employer

Reciprocity is not automatic. Until the employee files IL-W-5-NR (Employee's Statement of Nonresidence in Illinois) you are legally required to withhold Illinois tax. Keep the signed form on file; it is not sent to the state.

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Withhold Iowa income tax instead

Under the agreement the employee is taxed only by their state of residence. You will need a Iowa withholding account.

Iowa has local income taxes at the residence

Iowa school districts may levy an income surtax and counties may levy an emergency services surtax, both computed as a percentage of state income tax liability. These are assessed on the individual's Iowa return -- they are NOT withheld by the employer through payroll.

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Employer registrations you will need

Iowa — Income tax withholding: Iowa Department of Revenue
Illinois — Unemployment insurance: Illinois Department of Employment Security (IDES)

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Get the form

IL-W-5-NR — Illinois (official state source)

Illinois profile Iowa profile Full write-up for this pair

Change the inputs

Withholding determination

Answer six questions. The result is a shareable link, so you can paste it into a ticket or an email.

Employee lives inState of residence

Work is performed inWhere the employee physically sits

Employer is based inWhere the work is directed from

Days in the work stateThis calendar year, leave blank if unknown

Wages from work-state daysUS dollars, leave blank if unknown

Arrangement Works remotely rather than at an employer location Remote work is an employer necessity, not employee preference

Run a whole roster instead

This is a determination aid, not advice. StateSide encodes published state rules and applies them mechanically to the facts you enter. It does not know your entity structure, your nexus history, your equity compensation, or the dozens of exceptions that turn a clean rule into a judgement call. Every determination cites the state source it came from — verify against that source, and take anything consequential to a payroll tax professional before you act on it.