See federal withholding, FICA, and the flat 4.95% Illinois state tax after your IL-W-4 allowances for any pay frequency.
Illinois payroll taxes stack federal taxes with a single flat state tax. Every Illinois paycheck has federal Social Security (6.2%), Medicare (1.45%), federal income tax withholding, and Illinois income tax withheld at a flat 4.95% after subtracting the employee's IL-W-4 allowances. Illinois has no employee-paid unemployment contribution and no local city wage tax, so an Illinois stub is simpler than a Pennsylvania or New York stub. Employers separately pay State Unemployment Insurance on the first $14,250 of each worker's wages in 2026.
- Illinois income tax is a flat 4.95% on net income. For withholding, the employer applies 4.95% to wages after subtracting IL-W-4 allowances, so the same rate applies to bonuses and other supplemental pay.
- For 2026 each IL-W-4 Line 1 allowance is worth $2,925 and each Line 2 allowance is worth $1,000. The allowances are the only thing that moves the Illinois line for a given wage.
- Illinois has no local city income tax on wages. There is no Chicago earnings tax and nothing comparable to the Philadelphia Wage Tax or New York City resident tax.
- Illinois has no employee-paid unemployment tax. Unemployment insurance is funded entirely by employers.
- For 2026 employers pay State Unemployment Insurance on the first $14,250 of each worker's wages, at a new-employer rate of 3.350% or an experience-rated rate between 0.750% and 7.050%.
What Makes Illinois Payroll Different
Federal payroll tax is the same in every state. What changes from one state to the next is the second layer: state income tax withholding, employer unemployment taxes, and any local wage taxes. Illinois is unusual for how little that second layer contains. It taxes wages at a single flat 4.95% rate rather than a graduated schedule, it collects no unemployment contribution from employees, and it permits no local income tax on wages anywhere in the state.
That simplicity is the whole story of an Illinois paycheck. The state line is a flat rate reduced only by IL-W-4 allowances, so two Illinois workers with the same wage and the same allowances have the same state tax whether they live in Chicago, Peoria, or a small town. There is no city earnings tax to look up, no employee unemployment line, and no separate supplemental rate. The federal baseline behind all of this is explained in the how payroll taxes work guide.
Employee Withholding Overview in Illinois
An Illinois employee sees fewer lines on a pay stub than a worker in most states with an income tax. The deductions fall into two groups: federal taxes and Illinois state income tax. There is no employee unemployment line and no local tax line.
| Deduction | Who Pays | Rate (2026) | Wage Cap |
|---|---|---|---|
| Social Security (federal) | Employee + Employer | 6.2% | $184,500 |
| Medicare (federal) | Employee + Employer | 1.45% | None |
| Additional Medicare (federal) | Employee only | 0.9% | Wages over $200K ($250K MFJ) |
| Federal income tax withholding | Employee only | Varies (W-4) | None |
| Illinois state income tax | Employee only | 4.95% flat | None |
| Employee unemployment | Nobody | None | — |
| Local city wage tax | Nobody | None | — |
The federal lines work identically to any other state. For Social Security, the 2026 wage base is $184,500, after which Social Security stops for the year. Medicare has no cap. What is unique to Illinois is what is missing: no employee unemployment contribution and no local wage tax, leaving only the flat 4.95% state line on top of the federal taxes.
How Is Illinois State Income Tax Withheld?
Illinois individual income tax is a flat 4.95%. Unlike Pennsylvania's flat tax, Illinois does apply withholding allowances, so the state line is not a pure gross-times-rate figure. Employers follow the automated payroll method in Booklet IL-700-T: multiply the employee's IL-W-4 Line 1 allowances by the annual personal exemption and Line 2 allowances by $1,000, divide by the number of pay periods, subtract that from wages, and apply 4.95% to the remainder.
| Item | Illinois rule |
|---|---|
| State income tax rate | 4.95% flat |
| Brackets | None (single flat rate) |
| State allowance form | Form IL-W-4 |
| Line 1 allowance (2026) | $2,925 each |
| Line 2 allowance (2026) | $1,000 each |
| Supplemental wages | Same 4.95% |
| Nonwithholding form | IL-W-5-NR (reciprocity) |
Because the rate is flat, there are no brackets to walk. The federal Form W-4 sets federal withholding, covered in the W-4 withholding explained guide, while Form IL-W-4 sets the Illinois allowance count. The Illinois personal exemption of $2,925 for 2026 phases out entirely once federal adjusted gross income exceeds $250,000 for single filers or $500,000 for joint filers, so very high earners get no allowance value even if they claim allowances on the form.
Illinois Withholding Allowances (Form IL-W-4)
Form IL-W-4 is Illinois's version of the federal W-4, and it is the one lever an Illinois employee has over state withholding. It has two allowance lines that behave differently.
Line 1: Basic Personal Allowances
Line 1 is one allowance for yourself, one for your spouse if applicable, and one for each dependent you can claim. Each Line 1 allowance is worth the annual personal exemption, $2,925 in 2026 and $2,850 in 2025. If someone else can claim you as a dependent, you generally claim zero on Line 1.
Line 2: Additional Allowances
Line 2 covers additional allowances for you or your spouse being age 65 or older or legally blind, plus any allowances generated by the estimated-deductions worksheet on the form. Each Line 2 allowance is worth $1,000. Claiming more allowances on either line lowers the Illinois tax withheld each pay period; claiming fewer raises it.
To see how a given allowance count changes take-home pay, use the Illinois paycheck calculator, which asks for Line 1 and Line 2 allowances directly and applies the exact IL-700-T method.
Why Illinois Has No Local Wage Tax
This is the layer that catches people moving to Illinois from Pennsylvania, Ohio, or another local-tax state. In those states, a city or school district can levy its own income tax on wages, so two workers with identical pay can take home different amounts based only on where they live and work. Illinois does not permit that. State law reserves the income tax to the state itself, so no Illinois municipality, including Chicago, levies a local income or earnings tax on wages.
The practical result is that the Illinois line on your pay stub is the same anywhere in the state. There is no Chicago equivalent of the Philadelphia Wage Tax or the New York City resident tax, no PSD codes to look up, and no Residency Certification Form. An employer running Illinois payroll needs the flat 4.95% rate and the employee's IL-W-4 allowances, and nothing about the specific city changes the withholding.
Employer Payroll Obligations in Illinois
Illinois employers carry the federal employer taxes plus State Unemployment Insurance (SUI). The federal side, covered in the employer payroll tax obligations guide, includes the matching 6.2% Social Security and 1.45% Medicare plus Federal Unemployment Tax (FUTA). On top of that, Illinois adds the employer SUI contribution to the Department of Employment Security. There is no employee unemployment contribution to withhold.
| Employer tax | Rate (2026) | Wage base |
|---|---|---|
| SUI, new employer (standard) | 3.350% | $14,250 per employee |
| SUI, experience-rated minimum | 0.750% | $14,250 per employee |
| SUI, experience-rated maximum | 7.050% | $14,250 per employee |
| FUTA (federal, after state credit) | 0.6% | $7,000 per employee |
For 2026 the Illinois SUI taxable wage base is $14,250 per employee, so the employer SUI tax stops once an employee's year-to-date wages pass $14,250. A new non-construction employer pays the standard entry rate of 3.350%; some higher-turnover NAICS sectors pay a slightly higher entry rate. Experience-rated employers pay between 0.750% and 7.050% depending on their claims history, with both bounds including the 0.550% Fund Building Rate, computed against the 2026 State Experience Factor of 102%. These are employer costs and are never deducted from employee pay. The combined cost-to-hire can be modeled with the employer payroll tax calculator.
Illinois Has No Employee Unemployment Deduction
A handful of states, including Pennsylvania, take a small unemployment contribution directly from employee wages. Illinois is not one of them. The entire cost of Illinois unemployment insurance falls on employers through the Department of Employment Security, so there is no employee unemployment line on an Illinois pay stub at all.
This matters most for workers who move to Illinois from a state that does deduct employee unemployment and expect to see the same line. In Illinois that line simply does not exist, and its absence is correct, not a payroll error. Illinois also has no state-run disability insurance or paid-family-leave payroll tax deducted from wages, unlike California or New York, so the only mandatory deductions on an Illinois stub are federal taxes and the flat 4.95% state income tax.
Illinois Supplemental Wage Withholding
Supplemental wages are payments outside regular salary: bonuses, commissions, overtime, sales awards, and back pay. Many states apply a special flat supplemental rate to these payments. Illinois does not need a separate one.
- Illinois state income tax on supplemental wages: the same flat 4.95% that applies to regular wages.
- Employee unemployment: none, on supplemental wages or regular wages.
- Local wage tax: none, anywhere in Illinois.
Because the state rate is already flat, there is no separate Illinois supplemental schedule to look up. Federal income tax withholding on supplemental wages is a separate calculation set by the IRS, and Social Security and Medicare still apply under their own rules. For the federal supplemental math, use the Bonus Tax Calculator.
Illinois Filing and Payment Frequency
Illinois employers report and remit withheld state income tax through MyTax Illinois, the Department of Revenue's online system. Withholding is deposited either monthly or semiweekly depending on the amount the employer withholds, and employers file Form IL-941, the Illinois Withholding Income Tax Return, each quarter. Annual W-2 and 1099 information is also transmitted to the state. The federal deposit schedule is covered separately in the payroll tax deadlines guide.
State Unemployment Insurance is reported and paid separately from income tax withholding, on a quarterly basis through the Department of Employment Security using the employer's contribution and wage report. New employees must also be reported to the Illinois new hire directory within 20 days of the hire date. Because Illinois has no local wage tax, there are no separate local filings to manage.
How Take-Home Pay Works in Illinois
The calculation sequence runs from gross pay down to net pay. Because Illinois income tax begins with federal adjusted gross income, the same pre-tax deductions that reduce federal wages also reduce Illinois wages, which keeps the two bases aligned.
- Start with gross wages for the pay period.
- Subtract federal pre-tax deductions (401(k), Section 125 health premiums) to find taxable wages for both federal and Illinois income tax.
- Apply federal income tax withholding using the Form W-4 and IRS Publication 15-T.
- Subtract the per-period share of the IL-W-4 allowances, then apply Illinois income tax at 4.95% to the remainder.
- Subtract Social Security (6.2%) and Medicare (1.45%) on FICA wages (gross less Section 125 medical).
- The remainder is net pay. There is no employee unemployment line and no local tax line to subtract.
To see exact figures for a specific salary, filing status, allowance count, and pay frequency, use the Illinois paycheck calculator or the general take-home pay calculator for a full pre-tax benefits stack.
What Illinois Employees Should Check on a Pay Stub
- IL state tax line: Confirm Illinois income tax is withheld at 4.95% of wages after your IL-W-4 allowances, not on gross with no allowance.
- Allowance count: Verify the IL-W-4 allowance number the employer keyed matches the current form you filed, since that is the only lever on the state line.
- No local tax line: There should be no Chicago or city income tax line. If you see one, question it.
- No employee unemployment line: Illinois does not deduct employee unemployment, so there should be no such line.
- FICA: Confirm Social Security at 6.2% (until $184,500 of wages for 2026) and Medicare at 1.45% with no cap.
What Illinois Employers Should Verify Before Running Payroll
- State registration: Confirm active accounts for Illinois withholding (MyTax Illinois) and State Unemployment Insurance (IDES), and check the annual SUI rate notice.
- IL-W-4 on file: Collect a current Form IL-W-4 from each employee; without one, withhold as if zero allowances were claimed.
- SUI settings: Confirm the $14,250 wage base and the assigned employer contribution rate are set in the payroll system.
- Reciprocity: If an employee is a resident of Iowa, Kentucky, Michigan, or Wisconsin and filed Form IL-W-5-NR, suppress Illinois withholding on those wages.
- New hire reporting: Report each new worker to the Illinois new hire directory within 20 days.
- No local setup: Confirm no local wage tax is configured; Illinois has none, so any local income line is an error.
Illinois Payroll Quick Facts (2026)
| State income tax | Flat 4.95% on net income |
| State withholding form | Form IL-W-4 (allowance-based) |
| Line 1 allowance (2026) | $2,925 each |
| Line 2 allowance (2026) | $1,000 each |
| Supplemental rate | 4.95% (same as regular wages) |
| Local wage tax | None (statewide) |
| Employee unemployment | None |
| SUI wage base (employer) | $14,250 per employee |
| SUI new employer (standard) | 3.350% |
| SUI experience-rated range | 0.750% to 7.050% |
| Reciprocal states | IA, KY, MI, WI (via IL-W-5-NR) |
| Agencies | Dept. of Revenue, Dept. of Employment Security |
At LMN Tax Inc, the Illinois question we field most is why the whole paycheck is taxed at one rate. Illinois is genuinely flat at 4.95%, so once a client sees that the only lever on the state line is the IL-W-4 allowance count, the stub stops looking mysterious. The second recurring issue is workers arriving from a local-tax or employee-unemployment state, who expect a Chicago city tax or an employee unemployment deduction and are surprised those lines do not exist in Illinois. The mistake that actually costs money is at the top end: the personal exemption fully phases out above $250,000 single or $500,000 joint, so high earners who carried a large allowance count from an earlier year can end up under-withheld. We check the allowance math against expected income for anyone near those thresholds.
Real-World Example: An Illinois Biweekly Paycheck
Priya earns $65,000 per year and works in Chicago. She is paid biweekly (26 pay periods), files Single on her W-4, and claims one allowance on IL-W-4 Line 1, with no pre-tax contributions. The federal figure below follows the 2025 Publication 15-T method; the Illinois state line is exact for a 2025 allowance of $2,850 (for 2026 the allowance is $2,925, which lowers the state line slightly).
Gross pay per period: $65,000 / 26 = $2,500.00
| Line | Amount |
|---|---|
| Gross wages | $2,500.00 |
| Federal income tax withholding | −$227.46 |
| Social Security (6.2%) | −$155.00 |
| Medicare (1.45%) | −$36.25 |
| Illinois income tax (4.95%, 1 allowance) | −$118.32 |
| Net pay | $1,962.97 |
The Illinois line of $118.32 is the only state-specific deduction; a worker in Texas or Florida would not have it, while a worker in Pennsylvania would pay a smaller flat 3.07% state line but also a 0.07% employee unemployment line and a local Earned Income Tax that Illinois does not have. Priya's employer separately pays its matching Social Security and Medicare, plus Illinois SUI on the first $14,250 of her wages. Run your own numbers with the Illinois paycheck calculator, which applies the flat 4.95% state tax after your IL-W-4 allowances and correctly lets a traditional 401(k) deferral reduce the Illinois tax base.
When Illinois Withholding Logic Does Not Apply
- Reciprocal-state residents: A resident of Iowa, Kentucky, Michigan, or Wisconsin who files Form IL-W-5-NR has no Illinois state income tax withheld, because reciprocity sends the tax to their home state instead.
- Very high earners: The Illinois personal exemption is disallowed once federal AGI exceeds $250,000 single or $500,000 joint, so the allowance value drops to zero even if allowances are claimed on IL-W-4.
- Self-employed and 1099 workers: Independent contractors are not subject to Illinois withholding. They handle Illinois income tax through estimated payments, similar to the federal process in the self-employment tax guide.
- Multi-state remote workers: An employee who lives in one state and works in another may owe tax to more than one state; the flat Illinois withholding assumes Illinois-source wages and Illinois residency.
- Roth and post-tax elections: A Roth 401(k) deferral does not reduce the Illinois base, because it does not reduce federal wages either; only traditional pre-tax deferrals lower the Illinois line.
Frequently Asked Questions
If you are an Illinois employee, use the Illinois paycheck calculator to see federal withholding, FICA, and the flat 4.95% state tax for your salary, allowance count, and pay frequency, then confirm the IL-W-4 allowance number on your stub matches the form you filed.
If you are an Illinois employer, confirm your MyTax Illinois withholding and IDES unemployment accounts and your annual SUI rate notice, then model your full cost-to-hire with the employer payroll tax calculator and review the employer payroll tax obligations guide for federal deposit and filing duties.
- Illinois Department of Revenue: Booklet IL-700-T, Withholding Tax Tables (flat 4.95% rate; allowance method)
- Illinois Department of Revenue: Personal Exemption Allowance ($2,850 for 2025, $2,925 for 2026; $250,000 / $500,000 phase-out)
- Illinois Department of Revenue: How to Figure Illinois Withholding
- Illinois Department of Employment Security: Annual Employer Contribution Tax Rates
- IDES EA-50 (2026): State Experience Factor, wage base $14,250, rate range 0.750% to 7.050%, new employer 3.350%
- IRS Publication 15 (Employer's Tax Guide)
- IRS Topic 751: Social Security and Medicare Withholding Rates