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 Indiana income tax.

The work state does not tax these wages, so the residence state governs.

Income tax withheld to

Indiana

Flat 2.95%

Employee certificate

None required

No state withholding allowance certificate applies.

Unemployment insurance

Illinois

Localized under factor 1: Localization.

Reciprocal agreement

Illinois has agreements, but not with Indiana.

✓

Below the Illinois nonresident threshold

Illinois does not require nonresident withholding until the employee exceeds 30 working days in the state. You entered 0. Per Publication 130, Illinois withholding is not required on compensation paid to a nonresident employee who has performed fewer than 31 days of service in Illinois in the year and whose compensation is not localized in Illinois. In practice: more than 30 working days in Illinois triggers withholding.

Track this, because it flips mid-year

Once the threshold is crossed, most states require withholding on all in-state wages for the year, not just the excess. Set an alert well before the limit.

Indiana also taxes this income, with a credit

The residence state taxes worldwide income. The employee claims a credit on the Indiana return for tax paid to Illinois, which prevents true double taxation but usually still leaves a balance if Indiana's rate is higher. Some employers withhold for both states; many withhold only for Illinois and let the employee manage the difference.

Indiana has local income taxes at the residence

EVERY Indiana county imposes a Local Income Tax (LIT), withheld by the employer. CRITICAL: Indiana's reciprocity agreements do NOT cover county LIT -- employers must still withhold county tax from residents of reciprocal states who have a principal place of employment in an Indiana county as of January 1. Employees expecting 30 or fewer Indiana workdays may file Form WH-4AFF to claim a county tax exemption.

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Employer registrations you will need

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

Illinois profile Indiana 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.