Illinois State Income Tax Withholding
Last Updated: January 2026
Overview
Illinois uses a flat income tax rate mandated by the state constitution. The tax applies uniformly to all taxable income. Illinois uses a personal exemption allowance system rather than a standard deduction.
2026 Tax Rates
| Tax Type | Rate |
|---|---|
| Flat Tax Rate | 4.95% |
Illinois has used a flat tax since its inception, as required by the state constitution.
Deductions and Exemptions
Personal Exemption Allowance
| Exemption Type | Amount per Allowance |
|---|---|
| Personal Exemption | $2,925 |
Note: Illinois does not have a standard deduction. Instead, employees claim allowances that reduce taxable income.
Exemption Calculation
Each allowance claimed on Form IL-W-4 reduces the taxable wages by $2,925 (annually) before calculating withholding.
Special Considerations
State W-4 Form
Illinois requires Form IL-W-4 (Employee's Illinois Withholding Allowance Certificate). This form is mandatory and uses a different allowance system than the federal W-4.
Basic Allowances
Employees are entitled to the following basic allowances on Form IL-W-4:
| Condition | Allowances |
|---|---|
| Single, no dependents | 1 |
| Married (spouse not claiming) | 1 |
| Each dependent | 1 |
Additional Allowances
Form IL-W-4 includes worksheets for claiming additional allowances based on credits the employee expects to claim on their tax return.
No Local Income Taxes
Illinois does not have local income taxes.
Reciprocal Agreements
Illinois has reciprocal agreements with the following states:
| Reciprocal State |
|---|
| Iowa |
| Kentucky |
| Michigan |
| Wisconsin |
Employees who live in these states but work in Illinois can claim exemption from Illinois withholding by completing Form IL-W-5-NR.