Illinois (IL) Paycheck Calculator 2026

How Illinois withholding is calculated from your IL-W-4

Illinois withholding is 4.95% of your wages after subtracting the allowances you claim on Form IL-W-4, Employee’s Illinois Withholding Allowance Certificate. Your federal W-4 does not carry over: Illinois uses its own form, and if you never hand one in, Publication 130 tells your employer to withhold with no allowances at all.

The form has two allowance lines. Each Line 1 allowance (you, your spouse, each dependent) is worth $2,925 a year in 2026. Each Line 2 allowance is worth $1,000 and covers the extra exemptions for being 65 or older or legally blind. Line 3 lets you add a flat extra dollar amount per paycheck, which is the simplest fix if you have side income with no withholding.

The Illinois Department of Revenue publishes the formula employers use: tax withheld = 4.95% × (wages for the period − (Line 1 allowances × $2,925 + Line 2 allowances × $1,000) ÷ pay periods per year).

Working across the Illinois border: reciprocity with Iowa, Kentucky, Michigan and Wisconsin

Illinois has reciprocal agreements with Iowa, Kentucky, Michigan and Wisconsin, so wages earned in one of those states are taxed only by the state where you live. The agreements cover wages and salaries. Under the Iowa–Illinois agreement, for example, each state still taxes non-wage income that comes from sources inside it.

If you live in one of those four states and work in Illinois, give your employer Form IL-W-5-NR, Employee’s Statement of Nonresidence in Illinois. Without it, your employer must withhold Illinois tax, and you would have to file an Illinois return to get it back. If you move, you have 10 days to tell your employer and file a new IL-W-5-NR.

If you live in Illinois and commute to one of those states, you file the other state’s nonresidence certificate (Iowa uses form 44-016) so your employer withholds Illinois tax instead. Commuters to Indiana, Missouri or any other state without an agreement are in a different position: the work state taxes the wages, and you claim a credit for that tax on your Illinois return. An Illinois resident whose principal workplace is in an Indiana county on January 1 also owes that county’s income tax.

What else comes out of an Illinois paycheck

Illinois has no state disability or paid-leave payroll tax deducted from employees, and no Illinois city or county levies its own income tax on wages, Chicago included. So for most workers the full list of deductions is federal income tax, Social Security at 6.2% up to $184,500, Medicare at 1.45%, and Illinois income tax at 4.95%.

Because the rate is flat, a bonus is taxed by Illinois at the same 4.95% as your salary. The federal side is different: bonuses paid separately are often withheld at a flat 22%, which is why a bonus check can look heavily taxed even though your final federal bill is set on your return.

Most retirement income is exempt from Illinois tax, so pension payers do not have to withhold Illinois tax even when they withhold federal tax. Retirees who still owe Illinois tax on other income can sign a voluntary withholding agreement (which also requires an IL-W-4) instead of paying estimated tax.

Common Illinois paycheck mistakes

Most Illinois withholding problems come from a missing or stale IL-W-4, not from the tax itself.

• Not filing an IL-W-4: you get zero allowances and slightly too much withheld; the difference comes back as a refund.
• Claiming dependents on both spouses’ IL-W-4s: each allowance should be claimed once per household, or you will under-withhold.
• Forgetting to update the form: Publication 130 asks employers to have employees review their IL-W-4 before December 1 each year.
• Assuming the IL-W-5-NR is permanent after a move: residence changes must be reported within 10 days.
• High earners: the exemption is lost when federal AGI exceeds $250,000 ($500,000 joint), so withholding that subtracts allowances will run short.