🇺🇸 Illinois Income Tax — 2026 UPDATE

Illinois Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

⚠️Informational only — not legal or tax advice.

Tax year covered: 2025 (returns filed in 2026)
Applies to: Income earned January 1 – December 31, 2025
Returns filed: January – April 2026
Last verified: February 12, 2026

Illinois State Income Tax

Table of Contents

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Quick Reference

Does Illinois have income tax? Yes
Tax structure: Flat
Tax rate: 4.95%
Personal exemption (Self): $2,850
Personal exemption (Spouse): $2,850
Personal exemption (Dependent): $2,850
Additional exemption (65+ or blind): $1,000
Local income tax: No
Official source: https://tax.illinois.gov

Key Takeaways

  • Residents: Illinois residents pay Illinois income tax on income from all sources
  • Non-residents: Non-residents pay Illinois income tax only on Illinois-source income
  • Tax rate: Illinois has a flat income tax rate of 4.95% on all taxable income
  • No standard deduction: Illinois does not have a standard deduction like the federal system, but offers personal exemptions
  • Local income tax: Illinois does not permit local jurisdictions to levy income taxes
  • Reciprocity: Illinois has reciprocal agreements with Iowa, Kentucky, Michigan, and Wisconsin
  • Primary forms: Form IL-1040 for residents; Form IL-1040 with Schedule NR for non-residents and part-year residents
  • Retirement income: Illinois does not tax Social Security benefits, pension income, IRA distributions, or 401(k) distributions

Quick Questions About Illinois Income Tax

What is the Illinois income tax rate for 2025? Illinois has a flat income tax rate of 4.95% on all taxable income. This rate applies to both residents and non-residents on their Illinois-source income.

Does Illinois have state income tax? Yes. Illinois imposes a flat income tax rate of 4.95% on individuals. This has been the rate since July 1, 2017.

What are the income tax brackets in Illinois? Illinois does not have tax brackets. The state uses a flat tax system where all taxable income is taxed at 4.95%, regardless of income level.

Is Social Security taxed in Illinois? No. Illinois does not tax Social Security benefits. The federally taxed portion of Social Security benefits may be subtracted from Illinois income.

Does Illinois tax retirement income? No. Illinois does not tax most retirement income including qualified pension plans, 401(k) distributions, IRA distributions (including Roth conversions), Social Security benefits, railroad retirement income, and government retirement plans (including military pensions).

Do I need to file an Illinois income tax return? Illinois residents must file if they were required to file a federal return, or if Illinois base income exceeds the exemption allowance. Non-residents must file if they had Illinois-source income.

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Illinois Income Tax Rates and Brackets (2026)

The following tax rate applies to income earned in 2025, reported on tax returns filed in 2026.

Illinois Income Tax – Rate Snapshot (2025)
Illinois uses a flat individual income tax structure with personal exemptions instead of a standard deduction.
Tax Attribute Amount/Status
Tax Rate 4.95%
Tax Structure Flat
Number of Brackets 1 (flat rate)
State Income Tax Yes
Local Income Tax No
Personal Exemption (Tax Year 2025) $2,850
Additional Exemption (65+ or blind) $1,000
Standard Deduction None (Illinois uses exemptions)

Source: https://tax.illinois.gov/research/taxrates/income.html

Illinois Flat Tax Rate 2026
Illinois uses a flat tax system. All taxpayers pay the same rate regardless of income level or filing status.
Income Level Tax Rate
All taxable income 4.95%

Effective Date: This 4.95% rate has been in effect since July 1, 2017.

Source: https://tax.illinois.gov/research/taxrates/income.html

Personal Exemption Allowance

Illinois does not have a standard deduction. Instead, taxpayers claim personal exemptions.

Personal Exemption Amount (Tax Year 2025)

  • Basic exemption: $2,850 per person
  • Taxpayer: $2,850
  • Spouse (if married filing jointly): $2,850
  • Each dependent: $2,850

Additional Exemptions

  • Age 65 or older: $1,000 additional per person
  • Blind: $1,000 additional per person

These additional amounts apply separately for the taxpayer and spouse if married filing jointly.

Example Calculation

Single filer with no dependents:

  • Personal exemption: $2,850

Married filing jointly, both age 67:

  • Taxpayer exemption: $2,850
  • Spouse exemption: $2,850
  • Additional (taxpayer 65+): $1,000
  • Additional (spouse 65+): $1,000
  • Total exemptions: $7,700

Married filing jointly, 2 dependent children:

  • Taxpayer exemption: $2,850
  • Spouse exemption: $2,850
  • Dependent 1: $2,850
  • Dependent 2: $2,850
  • Total exemptions: $11,400

Income Limitation on Exemptions

Critical: The personal exemption allowance is not allowed if the taxpayer’s federal adjusted gross income exceeds:

  • $500,000 for married filing jointly
  • $250,000 for all other filing statuses

This limitation also applies to the Illinois Property Tax Credit and K-12 Education Expense Credit.

Dependent Exemption Rule

If someone else can claim you as a dependent:

  • Your exemption allowance is $2,850 if your Illinois base income is $2,850 or less
  • Your exemption allowance is $0 if your Illinois base income exceeds $2,850

Source: https://tax.illinois.gov/questionsandanswers/answer.851.html

How Illinois Income Tax Is Calculated

Step-by-Step Calculation

Step 1: Start with Federal Adjusted Gross Income (AGI) This is the amount from your federal Form 1040 or 1040-SR, Line 11.

Step 2: Add Illinois Additions Add back certain items that were deducted or excluded from federal AGI, such as:

  • Federally tax-exempt interest (except U.S. obligations)
  • Income from non-U.S. obligations

Step 3: Subtract Illinois Subtractions Subtract items that Illinois does not tax, including:

  • Social Security and railroad retirement benefits
  • Retirement income (pensions, 401(k), IRA distributions)
  • Interest from U.S. government obligations
  • Other qualifying subtractions

Step 4: Calculate Illinois Base Income Federal AGI + Illinois Additions – Illinois Subtractions = Illinois Base Income

Step 5: Subtract Personal Exemptions Illinois Base Income – Total Exemptions = Illinois Taxable Income

Step 6: Calculate Tax Illinois Taxable Income × 4.95% = Illinois Income Tax

Step 7: Subtract Credits Illinois Income Tax – Tax Credits = Tax Before Withholding

Step 8: Apply Withholding and Payments Tax Before Withholding – Withholding – Estimated Payments = Amount Owed or Refund

Example

Taxpayer profile:

  • Single filer
  • Federal AGI: $75,000
  • Social Security benefits (federally taxed portion): $5,000
  • No other additions or subtractions

Calculation:

  1. Federal AGI: $75,000
  2. Additions: $0
  3. Subtractions: $5,000 (Social Security)
  4. Illinois Base Income: $70,000
  5. Personal exemption: -$2,850
  6. Illinois Taxable Income: $67,150
  7. Illinois Tax (67,150 × 0.0495): $3,323.93

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Statutory Authority

State income tax in Illinois is authorized under the following legal framework:

Constitutional Authority:

  • Illinois Constitution, Article IX, Section 3
  • Grants the General Assembly power to impose taxes on income

Statutory Authority:

Key Statutory Sections:

  • 35 ILCS 5/201 – Tax imposed on individuals (4.95% rate)
  • 35 ILCS 5/201(b) – Tax imposed on trusts and estates (4.95% rate)
  • 35 ILCS 5/201(c) – Tax imposed on corporations (7% rate)
  • 35 ILCS 5/203 – Base income defined
  • 35 ILCS 5/204 – Standard exemption
  • 35 ILCS 5/205 – Exempt organizations

Administrative Regulations:

Administering Agency:

Legislative History:

  • Original enactment: 1969
  • Current flat rate of 4.95%: Effective July 1, 2017 (Public Act 100-0022)
  • Personal exemption for 2025: $2,850 (adjusted annually for cost of living)
  • Personal exemption for 2026: $2,925

This page compiles information directly from these statutory and regulatory authorities as implemented by the Illinois Department of Revenue.

Source: https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=577&ChapterID=8

Who Must File Illinois Income Tax

Residents

Illinois tax law requires residents to file a state income tax return (Form IL-1040) if:

  • You were required to file a federal income tax return, OR
  • You were not required to file a federal income tax return, but your Illinois base income is greater than your Illinois exemption allowance

Illinois base income is your federal adjusted gross income with certain additions and subtractions allowed by Illinois law.

Exemption allowance for Tax Year 2025:

  • $2,850 per person (taxpayer, spouse, dependents)
  • Plus $1,000 additional if 65 or older
  • Plus $1,000 additional if blind

Note: Exemptions are not allowed if federal AGI exceeds $500,000 (married filing jointly) or $250,000 (all other filing statuses).

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Part-Year Residents

Part-year residents must file Form IL-1040 and Schedule NR if they:

  • Were an Illinois resident for part of the year, AND
  • Had income from any source during their period of Illinois residency, OR
  • Earned income from Illinois sources while a non-resident, OR
  • Want a refund of any Illinois income tax withheld

Income allocation for part-year residents:

  • Report all income earned while an Illinois resident
  • Report Illinois-source income earned while a non-resident
  • Prorate personal exemptions based on the period of Illinois residency

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Non-Residents

Non-residents must file Form IL-1040 and Schedule NR if they had income from Illinois sources during the tax year.

Illinois-source income for non-residents includes:

  • Wages earned while physically working in Illinois
  • Business income from Illinois operations
  • Rental income from Illinois property
  • Income from Illinois partnerships, S corporations, or trusts
  • Gambling winnings from Illinois (including lottery)
  • Sale of Illinois real estate

Exception for reciprocal state residents: Residents of Iowa, Kentucky, Michigan, or Wisconsin who earned only wage income in Illinois are not required to pay Illinois income tax on that compensation due to reciprocal agreements.

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Special Filing Requirements

Illinois residents working in reciprocal states: If you are an Illinois resident who worked in Iowa, Kentucky, Michigan, or Wisconsin:

  • You must file Form IL-1040
  • Include as Illinois income any compensation received from employers in these states
  • Compensation paid to Illinois residents in these states is taxed by Illinois
  • These states do not tax Illinois residents’ compensation
  • If the reciprocal state withheld taxes, file for a refund with that state
  • You may not claim the other state’s withholding as a credit on your Illinois return

Retired Illinois residents: If you are a retired Illinois resident who filed a federal return, you must file Form IL-1040. However, certain types of retirement income (pension, Social Security, railroad retirement, governmental deferred compensation, IRA, 401(k)) may be subtracted from your Illinois income.

Nonresident aliens: You must file Form IL-1040 if your income is taxed under federal income tax law. Attach a copy of your federal Form 1040-NR.

Students: Students are not exempt from tax nor are there special residency provisions. However, income such as certain scholarships or fellowships that is not taxable under federal law is also not taxed by Illinois.

Deceased taxpayers: The surviving spouse or representative must file any return required of a deceased taxpayer.

Source: https://tax.illinois.gov/individuals/filingrequirements.html

What Income Is Taxable in Illinois

Illinois Tax Base

Illinois starts with your federal adjusted gross income (AGI) and makes certain additions and subtractions to arrive at Illinois base income.

Formula: Federal AGI + Illinois Additions – Illinois Subtractions = Illinois Base Income

Fully Taxable Income

The following income is generally taxable in Illinois (unless specifically exempted):

  • Wages and salaries
  • Self-employment income
  • Business income
  • Investment income (interest, dividends, capital gains) except:
    • Interest from U.S. government obligations (subtracted)
    • Certain retirement account distributions (subtracted)
  • Rental income
  • Partnership and S corporation income
  • Unemployment compensation
  • Alimony received (for divorces finalized before 2019)
  • Gambling and lottery winnings
  • Jury duty pay
  • Severance pay

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Social Security Benefits

Illinois does not tax Social Security benefits.

You may subtract the federally taxed portion of Social Security benefits from your Illinois income.

What qualifies:

  • Social Security retirement benefits
  • Social Security disability benefits
  • Social Security survivor benefits
  • Railroad retirement benefits (Tier I and Tier II)

Important: Only subtract the amount that was included in your federal adjusted gross income (federal Form 1040, Line 6b).

Source: https://tax.illinois.gov/individuals/pension.html

Retirement Income

Illinois does not tax most retirement income.

You may subtract from Illinois income the federally taxed portion of:

Qualified retirement plans:

  • 401(k) plans
  • 403(b) plans
  • 457 deferred compensation plans (government)
  • Qualified pension plans
  • Profit-sharing plans

Individual retirement accounts:

  • Traditional IRA distributions
  • SEP-IRA distributions
  • SIMPLE IRA distributions
  • Roth IRA conversions (amounts rolled over to Roth)

Government retirement plans:

  • Federal civil service pensions
  • State and local government pensions
  • Military retirement pay (all branches)
  • Illinois Teachers’ Retirement System (TRS)
  • Illinois Municipal Retirement Fund (IMRF)
  • Other Illinois public pension systems

Other qualifying retirement income:

  • Railroad retirement income
  • Retirement payments to retired partners
  • Lump-sum distributions of employer securities
  • U.S. retirement bond redemptions

What you must attach:

  • Copy of federal Form 1040 or 1040-SR, Pages 1 and 2
  • Form 1099-R if amounts are not clearly identified
  • Form SSA-1099 for Social Security benefits if not clearly identified

Source: https://tax.illinois.gov/research/publications/pubs/retirement-income.html

Military Retirement Pay

Illinois fully exempts military retirement pay.

All military retirement pay from any branch of service may be subtracted from Illinois income if included in federal adjusted gross income.

This applies to:

  • U.S. Army retirement
  • U.S. Navy retirement
  • U.S. Air Force retirement
  • U.S. Marine Corps retirement
  • U.S. Coast Guard retirement
  • U.S. Space Force retirement
  • Reserve and National Guard retirement

Source: https://tax.illinois.gov/research/publications/pubs/retirement-income.html

Illinois Income Tax Credits

Illinois offers the following tax credits. Most credits are non-refundable (cannot exceed your tax liability), though some are refundable (can result in a refund).

1. Illinois Earned Income Tax Credit (EITC) — REFUNDABLE

The Illinois EITC equals 20% of your federal Earned Income Tax Credit.

Eligibility:

  • Must qualify for the federal EITC
  • Must file an Illinois return (even if no tax is owed)
  • Credit amount based on income, filing status, and number of qualifying children

Filing requirement:

  • Complete Schedule IL-E/EIC with Form IL-1040
  • Attach federal Schedule EIC if required

Source: https://tax.illinois.gov/programs/eitc.html

2. Illinois Child Tax Credit — REFUNDABLE

New for 2024 and continuing in 2025: Increased to 40% of the Illinois EITC (previously 20%).

Eligibility:

  • Must qualify for the Illinois EITC
  • Must have at least one dependent child under age 12
  • Credit equals 40% of your Illinois EITC amount

How to claim:

  • Complete Schedule IL-E/EIC
  • Credit is automatically calculated if you qualify for EITC and have qualifying children

Source: FY 2025-16 Bulletin, https://tax.illinois.gov/research/publications/bulletins/fy-2025-16.html

3. Illinois Property Tax Credit — NON-REFUNDABLE

Available to Illinois residents who pay property tax on their principal residence.

Eligibility:

  • Must be an Illinois resident
  • Must have paid property tax on your principal residence
  • Credit amount is 5% of Illinois property tax paid, up to maximum limits

Income limitation:

  • Not allowed if federal AGI exceeds $500,000 (married filing jointly) or $250,000 (all other filing statuses)

How to claim:

  • Form IL-1040, Step 5

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

4. K-12 Education Expense Credit — NON-REFUNDABLE

For educational expenses paid for children in kindergarten through 12th grade.

Eligibility:

  • Expenses paid for a child’s education at an Illinois public or private K-12 school
  • Credit equals 25% of qualifying expenses over $250, up to $750 maximum credit

Income limitation:

  • Not allowed if federal AGI exceeds $500,000 (married filing jointly) or $250,000 (all other filing statuses)

Qualifying expenses:

  • Tuition
  • Book fees
  • Lab fees

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

5. Credit for Taxes Paid to Other States — NON-REFUNDABLE

If you are an Illinois resident and paid income tax to another state on income also taxed by Illinois, you may claim a credit.

Eligibility:

  • You are an Illinois resident
  • You paid income tax to another state on income earned there
  • The same income is included in your Illinois base income

Important: This credit does not apply to residents of reciprocal states (Iowa, Kentucky, Michigan, Wisconsin) working in Illinois.

How to claim:

  • Complete Schedule CR with Form IL-1040
  • Attach copy of other state’s tax return

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-schedule-cr.pdf

6. Illinois Gives Tax Credit — NON-REFUNDABLE

New for Tax Years ending on or after December 31, 2025.

25% income tax credit for contributions to permanent endowment funds held by Qualified Community Foundations (QCFs).

Eligibility:

  • Must apply through MyTax Illinois before making contribution
  • Receive Contribution Authorization Certificate (CAC)
  • Make qualifying contribution within 10 business days
  • QCF must confirm receipt

Credit limits:

  • Maximum $100,000 credit per taxpayer per year (25% of $400,000 contribution)
  • Married filing jointly: Each spouse can claim up to $100,000 (total $200,000)
  • Statewide annual limit: $5 million in credits

How to claim:

  • Receive Certificate of Receipt (COR) from QCF
  • Claim on Schedule 1299-A or Schedule ICR
  • Credit code 5670

Note: Taxpayers (other than individuals) must add back federal deduction for the contribution.

Source: https://tax.illinois.gov/programs/illinoisgives.html

7. Volunteer Emergency Worker Credit — NON-REFUNDABLE

Credit for qualified volunteer emergency workers.

Eligibility:

  • Must be awarded a certificate from the Office of the Illinois State Fire Marshal (OSFM) and IDOR
  • Limited number of $500 credits available

How to claim:

  • Must have Volunteer Emergency Worker Credit Certificate
  • Claim on Schedule ICR, Step 2, Section 3

Source: https://tax.illinois.gov/individuals/credits.html

8. Wages Paid to Returning Citizens Credit — NON-REFUNDABLE

Increased for 2025: Now 15% of qualified wages (previously lower percentage).

Eligibility:

  • Employer must apply and receive Returning Citizen Credit Certificate through MyTax Illinois
  • Must hire qualifying returning citizens
  • Credit: 15% of qualified wages paid
  • Maximum: $7,500 per returning citizen (for tax years ending on or after December 31, 2025)

Annual limit: $1 million in credits statewide, awarded first-come, first-served

Source: FY 2025-16 Bulletin, https://tax.illinois.gov/research/publications/bulletins/fy-2025-16.html

Other Credits (Require Certificates from DCEO)

New for Tax Years beginning on or after January 1, 2025:

REV (Reimagining Energy and Vehicles) Credits:

  • REV Illinois Credit
  • REV Construction Jobs Credit

MICRO (Manufacturing Illinois Chips for Real Opportunity) Credits:

  • MICRO Investment Credit
  • MICRO Illinois Credit
  • MICRO Construction Jobs Credit

Note: Taxpayers must have applicable tax credit certificate from the Illinois Department of Commerce and Economic Opportunity (DCEO) to claim these credits.

Source: FY 2025-16 Bulletin, https://tax.illinois.gov/research/publications/bulletins/fy-2025-16.html

Filing Deadlines

Regular Deadline

April 15, 2026 for Tax Year 2025 returns

If April 15 falls on a weekend or holiday, the deadline is the next business day.

Extension Deadline

October 15, 2026

Illinois grants an automatic six-month extension of time to file your return.

Important:

  • An extension to file is NOT an extension to pay
  • You must pay at least 90% of your total tax liability by April 15, 2026 to avoid penalties
  • Pay any estimated tax owed by April 15, 2026

How to request an extension: Illinois automatically grants a six-month extension. You do not need to file a separate extension form if you:

  • Filed a federal extension (federal Form 4868), OR
  • Pay your estimated Illinois tax by April 15, 2026

If you owe tax and want to make an extension payment, file Form IL-505-I.

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Estimated Tax Payments

If you have income not subject to withholding (self-employment, investment income, rental income), you may need to make quarterly estimated tax payments.

Due dates for 2025 tax year:

  • Q1 (January 1 – March 31): April 15, 2025
  • Q2 (April 1 – May 31): June 15, 2025
  • Q3 (June 1 – August 31): September 15, 2025
  • Q4 (September 1 – December 31): January 15, 2026

Due dates for 2026 tax year:

  • Q1: April 15, 2026
  • Q2: June 15, 2026
  • Q3: September 15, 2026
  • Q4: January 15, 2027

Safe harbor to avoid underpayment penalty: Pay estimated taxes equal to the lesser of:

  • 90% of your 2025 tax liability, OR
  • 100% of your 2024 tax liability

Form to use: Form IL-1040-ES, Estimated Income Tax Payments for Individuals

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Filing Options for Illinois Income Tax

Online Filing (E-File) — RECOMMENDED

Electronic filing is the fastest way to file and receive your refund.

MyTax Illinois (Free state filing):

  • Official Illinois online filing system
  • Available at: https://mytax.illinois.gov
  • File with or without creating a MyTax Illinois account
  • Automated calculations reduce errors
  • Immediate confirmation of submission
  • Direct deposit available for refunds
  • Prepopulated information from previous returns

IRS-Approved Tax Software: Software that supports Illinois returns:

  • TurboTax
  • H&R Block
  • TaxAct
  • TaxSlayer
  • FreeTaxUSA
  • Others approved by IRS

Free File Options: Some software providers offer free filing for taxpayers meeting income requirements. Check IRS Free File Alliance at https://www.irs.gov/freefile

Source: https://mytax.illinois.gov

Paper Filing

Paper forms are available for download and mail filing.

Primary forms:

  • Resident return: Form IL-1040, Illinois Individual Income Tax Return
  • Non-resident/Part-year return: Form IL-1040 with Schedule NR

Download location: https://tax.illinois.gov/forms/incometax.html

Where to mail paper returns:

If you are making a payment:

ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19044
SPRINGFIELD IL 62794-9044

If you are not making a payment or expect a refund:

ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19001
SPRINGFIELD IL 62794-9001

For overnight or courier delivery:

ILLINOIS DEPARTMENT OF REVENUE
SPRINGFIELD IL 62736

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Tax Preparer Options

Licensed tax professionals familiar with Illinois tax law include:

Certified Public Accountant (CPA):

  • Licensed accounting professionals
  • Can represent you before the IRS and Illinois Department of Revenue

Enrolled Agent (EA):

  • Federally licensed tax practitioners
  • Can represent you before the IRS and Illinois Department of Revenue

Tax Attorney:

  • Licensed attorneys specializing in tax law
  • Can provide legal advice and representation

IMPORTANT: Verify credentials before hiring a tax preparer. Check for:

  • Valid Preparer Tax Identification Number (PTIN)
  • Professional licenses in good standing
  • No disciplinary actions

Find preparers:

Source: https://tax.illinois.gov

Special Considerations for Illinois Income Tax

Remote Workers and Multi-State Taxation

Living in Illinois, Working for Out-of-State Employer

As an Illinois resident, you owe Illinois income tax on ALL income, regardless of where your employer is located.

What this means:

  • Employer location does NOT determine tax obligation
  • Income from employers in other states is fully taxable in Illinois
  • Illinois law requires you to report all income on Form IL-1040
  • You remain an Illinois resident based on domicile, not employer location

Example: An Illinois resident working remotely for a California company owes Illinois income tax on all wages from that California employer.

Tax consequence:

  • Report full wages on Illinois return
  • May also owe tax to the state where work is physically performed
  • If you owe tax to another state on the same income, claim a credit on Schedule CR

What to do:

  • Request that your out-of-state employer withhold Illinois taxes (Form IL-W-4)
  • OR make quarterly estimated tax payments using Form IL-1040-ES
  • File Form IL-1040 reporting all income
  • If you paid tax to another state, file Schedule CR to claim credit for taxes paid to other states

Source: https://tax.illinois.gov/questionsandanswers/answer.806.html

Working in Illinois, Living in Another State

Non-residents who perform work IN Illinois owe Illinois income tax on income earned from Illinois sources.

Physical Presence Rule: Income is sourced to Illinois based on where work is physically performed.

What this means:

  • If you physically work in Illinois, those wages are Illinois-source income
  • Must file Form IL-1040 with Schedule NR
  • Pay Illinois tax on Illinois-source income only
  • Your home state may also tax the same income

Exception — Reciprocal Agreement States: If you are a resident of Iowa, Kentucky, Michigan, or Wisconsin and work in Illinois, you are NOT required to pay Illinois income tax on wages, salaries, tips, and commissions.

Example: A Missouri resident who works in Illinois owes Illinois income tax on wages earned while physically present in Illinois.

What to do:

  • File Form IL-1040 with Schedule NR
  • Report only Illinois-source income
  • Claim credit on your home state return for Illinois taxes paid

Source: https://tax.illinois.gov/individuals/filingrequirements.html

⚠️ Interstate Tax Risk Indicator

Remote workers involving Illinois commonly encounter dual taxation complications with specific states.

Working with these states requires careful planning:

New York:

  • Applies “convenience of the employer” rule
  • May tax Illinois residents working remotely for NY employers
  • NY claims tax on income even if work performed in Illinois
  • Requires bona fide employer office outside NY to avoid NY tax
  • Risk level: HIGH for remote workers

California:

  • Aggressive residency audits for extended work periods
  • Tracks days present in California
  • May claim you are a California resident if present 9+ months
  • Scrutinizes high-income individuals closely
  • Risk level: HIGH for remote workers spending significant time in CA

Connecticut:

  • Complex credit system for taxes paid to other states
  • May limit credit for Illinois taxes paid
  • Requires careful allocation of income
  • Risk level: MEDIUM

Pennsylvania:

  • 200+ local income tax jurisdictions
  • Must track which PA municipality you worked in
  • Local taxes in addition to state tax
  • Complex compliance for remote workers
  • Risk level: MEDIUM due to local taxes

Massachusetts:

  • Telecommuter rule for non-residents working for MA employers
  • Enforcement status varies
  • May claim tax on remote work days
  • Risk level: MEDIUM

Iowa, Kentucky, Michigan, Wisconsin:

  • Reciprocal agreements with Illinois
  • Wages not subject to Illinois tax if resident of reciprocal state working in IL
  • Wages not subject to reciprocal state tax if IL resident working there
  • Risk level: LOW due to reciprocity

Source: https://tax.illinois.gov/questionsandanswers/answer.806.html and state-specific tax authority guidance

“Convenience of the Employer” Rule

Illinois does NOT apply a “convenience of the employer” rule.

Non-residents are taxed only on income from work physically performed in Illinois.

What this means:

  • If you are a non-resident working remotely from your home state for an Illinois employer, Illinois does NOT tax that income
  • Physical presence in Illinois is required for income to be Illinois-source income
  • Employer location in Illinois does not create Illinois tax obligation for non-residents

Contrast with states that DO apply this rule:

  • New York applies “convenience of the employer” rule
  • Arkansas, Connecticut, Delaware, Massachusetts, Nebraska, Pennsylvania have variations

Example:

  • Employee lives in Florida and works remotely for an Illinois company
  • All work performed in Florida (employee never travels to Illinois)
  • Result: No Illinois income tax owed (no Illinois source income)
  • Florida has no state income tax, so no state tax owed anywhere

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Reciprocal Agreements

Illinois has reciprocal agreements with 4 states:

  • Iowa
  • Kentucky
  • Michigan
  • Wisconsin

What reciprocity means:

For Illinois residents working in reciprocal states:

  • You pay income tax only to Illinois (your state of residence)
  • Reciprocal state does not tax your compensation
  • You MUST file Form IL-1040 and include wages from reciprocal state
  • If reciprocal state withheld taxes, file for refund with that state
  • You MAY NOT claim reciprocal state withholding as credit on Illinois return

For reciprocal state residents working in Illinois:

  • You pay income tax only to your home state
  • Illinois does not tax your compensation
  • Must file Form IL-1040 with Schedule NR if you:
    • Received Illinois income other than wages (rental, business, lottery)
    • Want a refund of Illinois withholding

What reciprocity covers:

  • Wages
  • Salaries
  • Tips
  • Commissions

What reciprocity does NOT cover:

  • Business income
  • Rental income
  • Investment income
  • Gambling/lottery winnings
  • Other non-wage income

Forms: Illinois does not require a specific exemption certificate. However, employees working in reciprocal states should:

  • Provide employer with Form W-4 showing correct state for withholding
  • Notify employer of reciprocal agreement status

Example 1:

  • Illinois resident works in Iowa
  • Earns $60,000 in wages
  • Iowa employer withheld Iowa state tax
  • Tax treatment:
    • File Illinois Form IL-1040 reporting $60,000
    • Pay Illinois tax on $60,000
    • File Iowa return to claim refund of Iowa withholding
    • Do NOT claim Iowa withholding on Illinois return

Example 2:

  • Michigan resident works in Illinois
  • Earns $50,000 in wages
  • Illinois employer withheld Illinois tax
  • Tax treatment:
    • File Michigan return reporting $50,000
    • Pay Michigan tax on $50,000
    • File Illinois Form IL-1040 with Schedule NR to claim refund
    • Report only non-wage Illinois income (if any) on Illinois return

Source: https://tax.illinois.gov/questionsandanswers/12.html

Multi-State Tax Filing

When earning income in multiple states, you typically must file multiple returns.

General rule:

  • File a resident return in your state of residence (Illinois) reporting ALL income
  • File non-resident returns in other states where you earned income
  • Claim a credit on your Illinois return for taxes paid to other states

Steps to avoid double taxation:

Step 1: File non-resident returns first File non-resident returns in states where you earned income. Pay those states first.

Step 2: File Illinois resident return Report all income from all sources on Form IL-1040.

Step 3: Claim credit for taxes paid to other states Complete Schedule CR to claim credit for income taxes paid to other states.

Schedule CR requirements:

  • You paid income tax to another state on income earned while an Illinois resident
  • The income subject to tax in the other state is included in Illinois base income
  • You did not deduct other state taxes on federal return (or you added it back on Schedule M)

What “state” means for credit purposes: Any state of the United States, District of Columbia, Puerto Rico, or any U.S. territory or possession, or political subdivision (e.g., county, city with income tax).

Example:

  • Illinois resident works remotely for Colorado company
  • Travels to Colorado 40 days during the year for meetings
  • Earns $100,000 total wages

Tax filing:

  1. Colorado non-resident return: Report approximately $10,959 (40/365 of $100,000)
  2. Pay Colorado tax on $10,959
  3. Illinois resident return: Report full $100,000
  4. Complete Schedule CR to claim credit for Colorado taxes paid
  5. Net result: Pay difference to Illinois

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-schedule-cr.pdf

Tax Residency vs Domicile

Understanding the difference between residency and domicile is critical for determining Illinois tax obligations.

Domicile Defined

Domicile is your permanent legal home — the place where you intend to return and consider “home” indefinitely.

Key characteristics of domicile:

  • You can have only ONE domicile at a time
  • Domicile continues until you establish a new domicile elsewhere with intent to remain
  • Intent to return is critical — temporary absences do not change domicile
  • Domicile is a combination of physical presence and intent

Factors Illinois considers in determining domicile:

  • Where you maintain your primary residence
  • Where you are registered to vote
  • Where you have a driver’s license
  • Where your vehicles are registered
  • Where you maintain bank accounts and financial ties
  • Where your family resides (spouse, children)
  • Where you belong to organizations (social, religious, professional)
  • Where you receive mail
  • Where you obtain professional licenses
  • Stated intent in legal documents (wills, trusts, deeds)
  • Where you file homestead exemption

Source: Illinois Department of Revenue administrative guidance

Residency Defined

Residency for Illinois tax purposes is based on domicile.

If Illinois is your domicile, you are an Illinois resident for the entire tax year, regardless of time spent in Illinois.

Illinois residency rules: Unlike some states, Illinois does NOT have a statutory day-count test (like “present 183 days = resident”).

Illinois residency is determined solely by domicile.

This means:

  • An Illinois domiciliary who spends 11 months working in another state is still an Illinois resident
  • A person domiciled in another state who spends 11 months working in Illinois is NOT an Illinois resident
  • Physical presence alone does not create Illinois residency

Source: Illinois Department of Revenue guidance

Critical Differences
Domicile vs Tax Residency (Illinois)
Factor Domicile Tax Residency (Illinois)
Number allowed One at a time Based on domicile
Based on Physical presence + intent Domicile
Changes when Establish new permanent home with intent Change domicile
Day count Not determinative No day-count test in Illinois
Tax impact Determines state of residence Owe tax on worldwide income

Common Domicile Scenarios

Scenario 1: Temporary work assignment

  • Facts: Illinois domiciliary accepts 1-year assignment in Texas, rents apartment
  • Domicile: Illinois (temporary absence, intent to return)
  • Tax result: Illinois resident for full year, reports all income to Illinois

Scenario 2: College student

  • Facts: Student from Iowa attends University of Illinois for 4 years
  • Domicile: Iowa (temporary presence for education, family remains in Iowa)
  • Tax result: Iowa resident; Illinois non-resident; pay Illinois tax only on Illinois-source income

Scenario 3: Retirement relocation

  • Facts: Illinois resident retires, sells home, buys home in Florida, moves family, changes driver’s license, registers to vote in Florida
  • Domicile: Florida (abandoned Illinois domicile, established Florida domicile)
  • Tax result: Part-year Illinois resident for year of move

Scenario 4: Dual homes (snowbirds)

  • Facts: Maintains home in Illinois and condo in Arizona, spends 5 months in Arizona
  • Domicile: Determined by totality of circumstances — which location has stronger ties?
  • Factors: Where is family? Where do you vote? Where is mail address? Where are vehicles registered?
  • Tax result: Depends on domicile determination

Source: Illinois Department of Revenue administrative guidance

Establishing New Domicile

To change domicile FROM Illinois TO another state, you must:

1. Abandon Illinois domicile:

  • Move belongings out of Illinois
  • Sell or rent Illinois home (or make non-primary residence)
  • Close or transfer bank accounts
  • End memberships in Illinois organizations

2. Establish new domicile in target state:

  • Move to new state with intent to remain indefinitely
  • Obtain driver’s license in new state
  • Register vehicles in new state
  • Register to vote in new state
  • Buy or rent primary residence in new state
  • Join organizations, establish ties in new state
  • File homestead exemption in new state (if available)
  • Update estate documents to reflect new domicile

3. Demonstrate intent:

  • Document your intent to make new state your permanent home
  • Update legal documents (will, trust, power of attorney)
  • File final Illinois resident return (part-year resident)
  • File non-resident returns for future years if Illinois-source income

Timing: Domicile changes on the date you both:

  • Physically move to new state, AND
  • Have intent to remain permanently

Source: General domicile principles applied to Illinois

Part-Year Residency

If you move TO or FROM Illinois during the tax year, you are a part-year resident.

Part-year residents must:

  • File Form IL-1040 with Schedule NR
  • Report income earned while Illinois resident
  • Report Illinois-source income earned while non-resident
  • Prorate personal exemptions based on period of Illinois residency

Income allocation:

While Illinois resident: Report ALL income from all sources for the period of Illinois residency.

While non-resident: Report ONLY Illinois-source income.

Exemption proration: Personal exemptions are prorated based on the number of months you were an Illinois resident.

Example:

  • Taxpayer moved from Illinois to Texas on July 1, 2025
  • Earned $60,000 while Illinois resident (January-June)
  • Earned $60,000 while Texas resident (July-December)
  • Total income: $120,000

Illinois return:

  • Illinois base income: $60,000 (January-June wages only)
  • Personal exemption: $2,850 × (6 months / 12 months) = $1,425
  • Illinois taxable income: $58,575
  • Illinois tax: $58,575 × 4.95% = $2,899.46

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Multi-State Residency Conflicts

Can you be a resident of two states at once?

Under Illinois law, no — you have one domicile. However, another state may claim you as a resident under that state’s rules (such as a day-count test), creating a conflict.

What happens:

  • Illinois taxes you as a resident (based on domicile)
  • Other state taxes you as a resident (based on their statutory test)
  • You file returns in both states reporting all income
  • Claim credit on domicile state return for taxes paid to statutory resident state

Example:

  • Illinois domicile
  • Work assignment in New York for 10 months (200+ days)
  • New York claims you as statutory resident (183-day test)

Tax filing:

  1. File New York resident return reporting all income
  2. Pay New York tax
  3. File Illinois resident return reporting all income
  4. Claim credit on Illinois Schedule CR for New York taxes paid
  5. Pay difference to Illinois

Resolution: Credit for taxes paid to other states prevents most double taxation, though some may remain if other state’s tax rate is lower than Illinois.

Source: Multi-state tax principles

Common Tax Filing Situations

These are factual clarifications based on official Illinois tax law.

Situation: “My employer is in another state, so I don’t owe Illinois tax”

Illinois law: Illinois residents owe tax on ALL income regardless of employer location. Employer location does NOT determine tax obligation. If you are an Illinois resident (domicile), you owe Illinois tax on all wages from any employer anywhere.

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Situation: “I work remotely full-time, so I don’t owe tax anywhere”

Tax law principle: All income is taxable in at least one jurisdiction. Remote work does not exempt income from taxation. Illinois residents owe Illinois tax on all income. Non-residents owe tax in their state of residence.

Source: General tax principles

Situation: “I’m a part-year resident, so I owe half the tax”

Illinois law: Part-year residents owe tax only on income earned during Illinois residency period, not a simple 50% reduction. Must allocate income based on when earned and prorate exemptions.

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Situation: “I lived in Illinois but worked in Wisconsin, so I don’t owe Illinois tax due to reciprocity”

Illinois law: Reciprocity prevents Wisconsin from taxing your wages, but you MUST pay Illinois tax on those wages. As an Illinois resident, you owe Illinois tax on all income including wages earned in reciprocal states. You must file Form IL-1040 and report the wages.

Source: https://tax.illinois.gov/questionsandanswers/12.html

Situation: “I only worked in Illinois for 2 weeks, so I don’t need to file”

Illinois law: If you are a non-resident and had Illinois-source income (even for 2 weeks), you must file Form IL-1040 with Schedule NR if your Illinois-source income exceeds your prorated exemption allowance. Exception: Residents of reciprocal states (Iowa, Kentucky, Michigan, Wisconsin) who earned only wage income are exempt.

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Military Personnel

Servicemembers Civil Relief Act (SCRA)

Active duty military members stationed in Illinois due to military orders:

Do NOT become Illinois residents solely due to military orders.

What this means:

  • Military orders alone do not change your domicile
  • You pay income tax to your state of legal residence (domicile)
  • You are NOT subject to Illinois income tax on military pay if Illinois is not your domicile

Example:

  • Active duty Army member with Texas domicile
  • Stationed at Scott Air Force Base in Illinois under military orders
  • Remains Texas resident for tax purposes
  • Does NOT owe Illinois tax on military pay
  • Texas has no income tax, so no state tax owed on military pay

Source: Servicemembers Civil Relief Act (50 USC § 3901 et seq.)

Military Spouses Residency Relief Act (MSRRA)

Spouses of active duty military can maintain their home state residency and are not taxed by Illinois on income earned in Illinois if:

Requirements:

  • Spouse is in Illinois solely to be with servicemember
  • Servicemember is in Illinois under military orders
  • Spouse maintains domicile in another state

What income is exempt:

  • Wages earned in Illinois by military spouse
  • Other earned income in Illinois

What to do:

  • Provide Illinois employer with documentation of MSRRA status
  • Do not have Illinois tax withheld
  • File tax return in home state of domicile

Example:

  • Active duty spouse stationed in Illinois (Oklahoma domicile)
  • Spouse maintains Oklahoma domicile
  • Spouse works civilian job in Illinois earning $45,000
  • Result: Not subject to Illinois tax on wages; file Oklahoma return only

Source: Military Spouses Residency Relief Act (Public Law 111-97)

Military Retirement Pay

Illinois fully exempts military retirement pay from state income tax.

All military retirement pay may be subtracted from Illinois income if it was included in federal adjusted gross income.

Eligible retirement pay:

  • U.S. Army retirement
  • U.S. Navy retirement
  • U.S. Air Force retirement
  • U.S. Marine Corps retirement
  • U.S. Coast Guard retirement
  • U.S. Space Force retirement
  • Reserve and National Guard retirement
  • Survivor Benefit Plan (SBP) payments

Age requirement: None. The exemption applies regardless of age.

How to claim:

  • Report retirement pay on federal return as usual
  • Subtract on Form IL-1040, Line 5
  • Attach federal Form 1040 or 1040-SR and Form 1099-R

Source: https://tax.illinois.gov/research/publications/pubs/retirement-income.html

What Military Members DO Owe Tax On

Military members who ARE Illinois residents (Illinois domicile) owe Illinois income tax on:

Taxable income:

  • Non-military income earned in Illinois
  • Investment income (interest, dividends, capital gains)
  • Rental income from Illinois property
  • Business income
  • Self-employment income

Not taxable:

  • Military pay (if domiciled elsewhere)
  • Military retirement pay (all states, fully exempt in Illinois)

Source: https://tax.illinois.gov/research/publications/pubs/retirement-income.html

Retirees

Social Security Benefits

Illinois does not tax Social Security benefits.

You may subtract the full federally taxed portion of Social Security benefits from your Illinois income.

What qualifies:

  • Social Security retirement benefits
  • Social Security disability benefits (SSDI)
  • Social Security survivor benefits
  • Railroad retirement benefits (Tier I and Tier II)

There are NO income thresholds or phase-outs.

All Social Security benefits that were included in federal AGI may be subtracted, regardless of income level.

How to claim:

  • Report on federal Form 1040, Line 6b
  • Subtract on Illinois Form IL-1040, Line 5
  • Attach federal Form 1040 or 1040-SR
  • Attach Form SSA-1099 if amounts not clearly identified

Source: https://tax.illinois.gov/individuals/pension.html

Pension Income

Illinois does not tax pension income.

Private pensions: All distributions from qualified private pension plans may be subtracted if included in federal AGI.

What qualifies:

  • Defined benefit pension plans
  • 401(k) plans
  • 403(b) plans
  • Profit-sharing plans
  • Money purchase pension plans
  • Other qualified employer plans under IRC §401-408

Public pensions: All government pension income is exempt from Illinois tax:

  • Federal civil service pensions (CSRS, FERS)
  • State of Illinois pensions (SERS, SURS, TRS, JRS, GARS, IMRF)
  • Other state government pensions
  • Local government pensions
  • Military retirement (all branches)

There are NO income limits. All pension income is exempt regardless of total income.

Source: https://tax.illinois.gov/research/publications/pubs/retirement-income.html

Retirement Account Distributions

401(k) and Traditional IRA:

Illinois does not tax distributions from:

  • Traditional 401(k) plans
  • Traditional IRA accounts
  • Roth 401(k) distributions (if federally taxed portion)
  • SEP-IRA distributions
  • SIMPLE IRA distributions
  • 457 deferred compensation plans

Roth IRA:

Qualified Roth IRA distributions are not federally taxed, so there is nothing to subtract on Illinois return. Non-qualified distributions that are federally taxed may be subtracted on Illinois return.

Roth conversions:

Amounts rolled over from traditional IRA to Roth IRA that are included in federal AGI may be subtracted on Illinois Form IL-1040, Line 5.

Required Minimum Distributions (RMDs):

RMDs from retirement accounts are fully subtracted on Illinois return (if qualified retirement plans).

Early withdrawal penalties:

The 10% federal early withdrawal penalty applies at the federal level. For Illinois purposes, the distribution itself is subtracted, so there is no Illinois tax regardless of age.

How to claim:

  • Report on federal Form 1040 or 1040-SR (Lines 4b, 5b)
  • Subtract on Illinois Form IL-1040, Line 5
  • Attach federal Form 1040 or 1040-SR
  • Attach Form 1099-R if amounts not clearly identified

Source: https://tax.illinois.gov/research/publications/pubs/retirement-income.html

What Retirees DO Owe Tax On

While retirement income is exempt, Illinois retirees owe tax on:

Taxable income:

  • Wages from post-retirement employment
  • Self-employment income
  • Business income
  • Rental income
  • Investment income:
    • Interest (except U.S. obligations)
    • Dividends
    • Capital gains
  • Distributions from non-qualified annuities (to extent not already taxed)

Source: https://tax.illinois.gov/individuals/filingrequirements.html

Students

College students attending school in Illinois do NOT automatically become residents for tax purposes.

You Remain a Non-Resident If:

  • You maintain legal residence (domicile) in another state
  • Your presence in Illinois is temporary for educational purposes
  • You intend to return to your home state after graduation
  • Your family maintains home in another state
  • You maintain driver’s license and voter registration in home state

What you owe Illinois tax on:

  • Wages earned from working in Illinois
  • Scholarships/fellowships used for non-qualified expenses (if taxable federally)

What you don’t owe Illinois tax on:

  • Qualified scholarships and fellowships (tuition, fees, books, supplies, equipment)
  • Income earned in your home state (e.g., summer job)
  • Income earned online/remotely for out-of-state employers

Source: https://tax.illinois.gov/individuals/studentquestions.html

Establishing Illinois Residency as a Student

Students CAN become Illinois residents if they take affirmative steps to establish domicile:

Actions that establish Illinois domicile:

  • Register to vote in Illinois
  • Obtain Illinois driver’s license
  • Register vehicles in Illinois
  • Purchase or lease property in Illinois
  • Accept permanent employment in Illinois
  • Maintain continuous presence beyond educational purposes
  • Demonstrate intent to remain in Illinois indefinitely

Factors NOT sufficient alone:

  • Having an Illinois address
  • Attending Illinois school
  • Working part-time in Illinois during school

Source: https://tax.illinois.gov/individuals/studentquestions.html

Illinois Residents Attending School Elsewhere

If you are an Illinois resident (domicile) attending school in another state:

You remain an Illinois resident if:

  • Illinois is your permanent home
  • You intend to return to Illinois after graduation
  • Your presence in other state is temporary for education

What you owe Illinois tax on: All income from all sources, including:

  • Wages from job in state where you attend school
  • Wages from summer job in any state
  • Investment income
  • All other income

Credit for taxes paid to other states: If you pay income tax to the state where you attend school, claim credit on Illinois Schedule CR.

Source: https://tax.illinois.gov/individuals/studentquestions.html

Student FAQ

Q: Do I need to file an Illinois return if I’m a student?

Students are not exempt from filing requirements. Same rules apply as other taxpayers.

Illinois residents: File if required to file federal return or Illinois base income exceeds exemption allowance ($2,850 for 2025).

Non-residents: File if you had Illinois-source income.

Q: Can someone claim me as a dependent?

Check with the IRS to determine federal dependency status. If you are claimed as a dependent on someone’s federal return, you are also claimed on their Illinois return.

Q: What if I’m claimed as a dependent?

If someone else can claim you as a dependent:

  • You are entitled to $2,850 exemption if your Illinois base income is $2,850 or less
  • You are entitled to $0 exemption if your Illinois base income exceeds $2,850

Q: Does Illinois have a standard deduction?

No. Illinois uses personal exemptions instead of a standard deduction.

Source: https://tax.illinois.gov/individuals/studentquestions.html

Forms & Publications

Primary Tax Return Forms

Resident return:

Non-resident/Part-year return:

Common Schedules

Schedule M: Other Additions and Subtractions

Schedule CR: Credit for Tax Paid to Other States

Schedule IL-E/EIC: Illinois Earned Income Tax Credit

Schedule ICR: Illinois Credits

Schedule 1299-A: Income Tax Credits (non-refundable)

Schedule IL-WIT: Illinois Withholding Income Tax

Withholding Forms

Employee Withholding Certificate:

Employer Withholding Tables:

Estimated Tax Forms

Individual Estimated Payments:

Extension Payment:

Amended Return

Amended Individual Return:

Key Publications

Publication 120: Retirement Income

Publication 130: Who is Required to Withhold Illinois Income Tax

Publication 131: Withholding Income Tax Payment and Filing Requirements

FY 2026-15: What’s New for Illinois Income Taxes

Where to Submit Paper Returns

If you are making a payment:

ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19044
SPRINGFIELD IL 62794-9044

If you are not making a payment or expect a refund:

ILLINOIS DEPARTMENT OF REVENUE
PO BOX 19001
SPRINGFIELD IL 62794-9001

For overnight or courier delivery:

ILLINOIS DEPARTMENT OF REVENUE
SPRINGFIELD IL 62736

Source: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Penalties and Interest

Late Filing Penalty

Illinois imposes a penalty for filing your return late.

Penalty amount:

  • 2% per month (or part of a month) the return is late
  • Maximum penalty: 25% of the tax due

How calculated: Penalty is based on unpaid tax shown on return, minus tax withheld and credits.

Example:

  • Tax due: $1,000
  • Filed 3 months late
  • Late filing penalty: $1,000 × 2% × 3 = $60

Source: 35 ILCS 5/1005(a)

Late Payment Penalty

Illinois imposes a penalty for paying tax late.

Penalty amount:

  • 2% per month (or part of a month) the payment is late
  • Maximum penalty: 25% of the unpaid tax
  • Penalty starts accruing the day after the due date

Applies when:

  • Tax is paid after the due date
  • Estimated tax payments are insufficient

Example:

  • Tax due April 15: $1,500
  • Paid July 20 (3+ months late)
  • Late payment penalty: $1,500 × 2% × 4 = $120

Source: 35 ILCS 5/1005(a)

Interest on Unpaid Tax

Interest accrues on unpaid tax from the original due date until paid.

Interest rate: The interest rate is set by Illinois law and changes periodically.

Current rate information: Check https://tax.illinois.gov/research/taxrates/interest.html for current interest rates.

How interest works:

  • Compounds annually
  • Accrues from original due date (April 15)
  • Applies to both assessed tax and penalties
  • Cannot be waived

Source: 35 ILCS 5/1003; https://tax.illinois.gov/research/taxrates/interest.html

Underpayment of Estimated Tax Penalty

If you are self-employed or have income not subject to withholding, you may owe a penalty for underpaying estimated taxes.

Penalty may apply if: You did not pay enough tax through withholding or estimated tax payments during the year.

Safe harbor – NO penalty if:

You meet ANY of these tests:

  1. 90% test: Estimated payments + withholding ≥ 90% of current year tax
  2. 100% test: Estimated payments + withholding ≥ 100% of prior year tax
  3. De minimis test: Total tax due is less than $1,000

Calculation: Illinois uses a specific calculation based on when payments were made. The penalty is not a flat percentage but calculated quarterly.

How to avoid penalty:

  • Make quarterly estimated payments using Form IL-1040-ES
  • Have employer increase withholding on Form IL-W-4
  • Pay 100% of prior year’s tax liability in equal quarterly installments

Source: 35 ILCS 5/1003; https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf

Information Verification Log

Information Verification Sources
Official Illinois Department of Revenue references
Information Type Source Last Verified
Tax rate (4.95%) Illinois DOR – Income Tax Rate February 12, 2026
Personal exemption ($2,850) Illinois DOR – Exemption FAQ February 12, 2026
Filing requirements Illinois DOR – Filing Requirements February 12, 2026
Retirement income treatment Illinois DOR – Retirement Income February 12, 2026
Reciprocal agreements Illinois Reciprocity Guidance February 12, 2026
Tax credits Illinois DOR – Credits February 12, 2026
Forms and publications Illinois Income Tax Forms February 12, 2026
Illinois Income Tax Act Illinois Compiled Statutes (35 ILCS 5) February 12, 2026

Official Illinois Income Tax Resources

All information on this page is compiled exclusively from official government sources.

Illinois Department of Revenue

Main Website: https://tax.illinois.gov

MyTax Illinois (Online Account Management): https://mytax.illinois.gov

  • File returns online
  • Make payments
  • Check refund status
  • Respond to notices
  • View account history

Individual Income Tax Information: https://tax.illinois.gov/individuals.html

Tax Forms: https://tax.illinois.gov/forms/incometax.html

Tax Rate Information: https://tax.illinois.gov/research/taxrates/income.html

Publications Library: https://tax.illinois.gov/research/publications.html

Informational Bulletins: https://tax.illinois.gov/research/publications/bulletins.html

Retirement Income Information: https://tax.illinois.gov/individuals/pension.html

Illinois Earned Income Tax Credit: https://tax.illinois.gov/programs/eitc.html

Filing Requirements: https://tax.illinois.gov/individuals/filingrequirements.html

Illinois Compiled Statutes

Illinois Income Tax Act: 35 ILCS 5/ https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=577&ChapterID=8

Key Sections:

  • Section 201: Tax imposed
  • Section 203: Base income defined
  • Section 204: Standard exemption
  • Section 205: Exempt organizations
  • Section 304: Resident credit for taxes paid to other states

Illinois Administrative Code: 86 Illinois Administrative Code https://www.ilga.gov/commission/jcar/admincode/086/086parts.html

Contact Information

Phone:

  • Toll-free: 1-800-732-8866
  • Springfield: 217-782-3336
  • TTY: 1-800-544-5304

Hours: 8:00 AM to 5:00 PM Central Time, Monday through Friday

Walk-In Office: Willard Ice Building 101 West Jefferson Street Springfield, IL 62702 Hours: 8:00 AM to 5:00 PM, Monday through Friday

Email: Email options available through MyTax Illinois: https://mytax.illinois.gov

Forms Order Line (24-hour automated): 1-800-356-6302

Source: https://tax.illinois.gov/questionsandanswers/contact.html

Refund Information

Where’s My Refund?

Check refund status through:

Refund Processing: After IDOR processes refund, check payment status:

Typical timeframes:

  • E-filed returns with direct deposit: 2-3 weeks
  • Paper returns: 8-12 weeks
  • Complex returns or those requiring review: longer

Free Tax Assistance

VITA (Volunteer Income Tax Assistance): Free tax help for individuals earning $67,000 or less, persons with disabilities, limited English speakers.

Find locations: https://irs.treasury.gov/freetaxprep

TCE (Tax Counseling for the Elderly): Free tax help for individuals age 60 and older.

Find locations: https://irs.treasury.gov/freetaxprep

AARP Tax-Aide: Free tax assistance program by AARP Foundation.

Find locations: https://www.aarp.org/money/taxes/aarp_taxaide

Where to Check for Updates

Current Tax Rate: https://tax.illinois.gov/research/taxrates/income.html Updated when rate changes (rate has been 4.95% since July 1, 2017)

Personal Exemption Amounts: https://tax.illinois.gov/questionsandanswers/answer.851.html Updated annually, typically announced in December for following tax year

Forms Library: https://tax.illinois.gov/forms/incometax.html Forms for current year available starting January

Legislative Changes:

Administrative Guidance:

Taxpayer Notices:

Email Updates: MyTax Illinois account holders can receive email notifications about tax updates and refund status.

Note: This guide will be reviewed and updated in January 2027 for Tax Year 2026. For real-time updates, always consult the official Illinois Department of Revenue website at https://tax.illinois.gov

Tax Glossary

Adjusted Gross Income (AGI): Total income minus specific deductions from federal Form 1040 or 1040-SR, Line 11. This is the starting point for calculating Illinois tax.

Illinois Base Income: Federal AGI plus Illinois additions minus Illinois subtractions. Used to calculate Illinois taxable income.

Illinois Taxable Income: Illinois base income minus personal exemptions. This amount is multiplied by 4.95% to calculate tax.

Resident: Individual whose domicile is in Illinois. Illinois residents owe tax on all income from all sources.

Non-Resident: Individual whose domicile is not in Illinois. Non-residents owe tax only on Illinois-source income.

Part-Year Resident: Individual who moved into or out of Illinois during the tax year. Part-year residents file Schedule NR and allocate income based on residency period.

Domicile: Your permanent legal home — the place you intend to return to indefinitely. You can have only one domicile at a time.

Illinois-Source Income: Income derived from Illinois sources, including wages earned while physically working in Illinois, business income from Illinois operations, and rental income from Illinois property.

Reciprocity: Agreement between states where residents working across state lines pay tax only to their state of residence. Illinois has reciprocal agreements with Iowa, Kentucky, Michigan, and Wisconsin.

Personal Exemption: Fixed dollar amount ($2,850 for 2025) subtracted from Illinois base income for taxpayer, spouse, and each dependent. Illinois uses exemptions instead of a standard deduction.

Tax Credit: Dollar-for-dollar reduction in tax owed (e.g., $500 credit reduces tax by $500).

Refundable Credit: Tax credit that can result in a refund. Illinois EITC and Child Tax Credit are refundable.

Non-Refundable Credit: Tax credit that can only reduce tax to zero, cannot result in refund.

Withholding: Tax deducted from your paycheck by your employer and sent to Illinois on your behalf.

Estimated Tax: Quarterly tax payments made on income not subject to withholding (self-employment, investment, rental income).

Flat Tax: Tax system where all income is taxed at the same rate. Illinois has a flat rate of 4.95%.

Update History

This section documents all material changes to Illinois income tax information on this page.

February 2026 – Initial Publication

  • Published comprehensive Illinois income tax guide for Tax Year 2025 (filed in 2026)
  • Tax rate: 4.95%
  • Personal exemption: $2,850
  • Documented reciprocal agreements with Iowa, Kentucky, Michigan, Wisconsin
  • Verified all information from official Illinois sources
  • Sources: Illinois Department of Revenue, 35 ILCS 5/, FY 2026-15 Bulletin

Verification Schedule:

  • Annual Update: January (new personal exemption amounts, tax law changes)
  • Mid-Year Review: June (legislative changes, new credits)
  • Continuous Monitoring: Emergency tax legislation, rate changes
  • Source Link Check: Quarterly (all .gov URLs verified functional)

Last comprehensive update: February 12, 2026
Next scheduled review: January 2027 (for Tax Year 2026 updates)

Others

California
New York
Texas
Pennsylvania
Florida
New Jersey
Ohio
Massachusetts

Legal Disclaimer: Nature of This Compilation This document is a compilation of publicly available information from official government sources. It is NOT: Legal advice An interpretation of laws or regulations A substitute for consultation with a licensed attorney A comprehensive treatment of all applicable laws Guaranteed to be complete or current