Illinois vs Wisconsin: Taxes & Take-Home Pay 2026

Reciprocity makes commuting simple

Illinois and Wisconsin have a reciprocal agreement: wages are taxed only by the state where you live. A Kenosha resident who works in Lake County, Illinois pays Wisconsin income tax, and a Rockford resident who works in Beloit pays Illinois income tax.

To stop the wrong state’s withholding, Wisconsin residents working in Illinois give their employer Form IL-W-5-NR, and Illinois residents working in Wisconsin give Form W-220. If tax is withheld for the work state anyway, you file a nonresident return there to get a refund. The agreement covers wages, salaries, tips and commissions; other Illinois-source income, such as rent from an Illinois property, is still taxed by Illinois.

Flat vs progressive

Illinois taxes net income at a flat 4.95% after a $2,925 per-person exemption. Wisconsin has four rates: 3.50%, 4.40%, 5.30%, 7.65%. The 4.4% bracket ends at $50,480 for single filers, after which 5.3% applies up to $323,290. Wisconsin’s standard deduction slides down as income rises, from $13,560 single at low incomes to zero, and each exemption is $700.

For a single filer at $75,000, Illinois tax is about $3,568. Our engine puts Wisconsin at about $2,633, but it uses the maximum standard deduction. Using Wisconsin’s 2025 standard deduction table, a single filer at $75,000 gets $6,876, so Wisconsin tax is closer to $2,987: still about $581 less than Illinois.

The gap closes as income rises. Wisconsin’s deduction shrinks to zero at $132,500 of income for single filers, after which almost every dollar above $50,480 is taxed at 5.3%, more than Illinois’s 4.95%. At $150,000 the two are roughly level: about $7,326 in Wisconsin and $7,280 in Illinois. Above that, and especially once Wisconsin’s 7.65% rate starts at $323,290, Illinois is cheaper.

Illinois vs Wisconsin at a glance

Worked example: Kenosha resident commuting to Illinois

Under reciprocity, a Kenosha resident earning $75,000 at a Gurnee warehouse files only a Wisconsin resident return and pays Wisconsin rates on the full salary. Moving a few miles south into Illinois would replace that with Illinois’s 4.95%, which at this salary means roughly $581 more state income tax a year. Because no credit is involved, the comparison is simply Wisconsin tax versus Illinois tax on the same wages, plus differences in property and sales tax.

Retirees

The two states treat retirement income very differently. Wisconsin does not tax Social Security, and from 2025 residents aged 67 or older can subtract up to $24,000 of other retirement income; the rest is taxed at the normal rates. Illinois lets residents subtract qualifying pension, 401(k) and IRA income in full. A retiree drawing $60,000 a year from a qualified private pension plan therefore pays nothing on it in Illinois but would pay Wisconsin tax on the part above the subtraction.

Sales tax and property tax

Wisconsin’s 5% state sales tax plus county and city additions averages 5.72%. Illinois averages 8.98%, and Chicago is 10.5%.

Property tax is levied locally in both states and bills vary widely by municipality and school district. Wisconsin offers a school property tax credit on its income tax return; Illinois offers a property tax credit for filers with federal AGI up to $250,000 single or $500,000 joint. Compare actual bills rather than statewide averages.

Payroll and the year you move

Neither state withholds employee contributions for disability or paid family leave, so a paycheck in either state shows only federal taxes and state income tax. If you move during the year, file as a part-year resident in both states (Illinois uses Form IL-1040 with Schedule NR), and give your employer a new reciprocity form on the day your residence changes.