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IL · payroll profile

Illinois

Everything an out-of-state employer needs before running a Illinois payroll: what to withhold, which form the employee signs, whether reciprocity applies, and who to register with.

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Personal income tax
Flat 4.95%
Reciprocal agreements
4 states
SUI wage base 2026
$14,250
Local income taxes
No

Income tax withholding

Imposes wage income tax Yes
Rate structure Flat 4.95%
Withholding certificate IL-W-4
Employee's and other Payee's Illinois Withholding Allowance Certificate
Accepts federal Form W-4 No
Convenience-of-the-employer rule No
Nonresident withholding threshold 30 days
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.
Local income taxes No
No local personal income or wage taxes in Illinois. (Chicago's former 'head tax' on employers was repealed in 2014.)

Reciprocity

Illinois exempts residents of 4 states from Illinois withholding, provided the employee files IL-W-5-NR with the employer.

IowaKentuckyMichiganWisconsin
Confirmed on the face of Form IL-W-5-NR (rev. R-12/10) and in Publication 130 (Feb 2026). Residents of Iowa, Kentucky, Michigan and Wisconsin file IL-W-5-NR with the Illinois employer to stop Illinois withholding; the employer instead withholds for the home state. Covers wages/salaries only, not other Illinois-source income. Illinois has NO agreement with Indiana or Missouri.

States that exempt Illinois residents

A Illinois resident working in these states files that state's certificate and is taxed only by Illinois.

District of ColumbiaIowaKentuckyMichiganWisconsin

Unemployment insurance and paid leave

Taxable wage base 2026 $14,250
2025 base was $13,916.
New employer rate 2.8%
Experience rate range 0.2% – 6.5%
Experience-rating method benefit ratio
Employee UI contribution No
Paid family / medical leave No

Employer registration

Tax agency
Illinois Department of Revenue
UI agency
Illinois Department of Employment Security (IDES)

Sources

tax.illinois.gov · tax.illinois.gov · tax.illinois.gov · oui.doleta.gov · oui.doleta.gov · oui.doleta.gov

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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.