How Much Taxes Are Deducted From a Paycheck in Illinois?

Understanding paycheck deductions is important for managing personal finances. Gross pay represents total earnings before reductions, while net pay is the amount received after various withholdings. These deductions contribute to government programs and employee benefits, directly impacting your take-home amount.

Federal Income Tax Withholding

Federal income tax withholding is a significant paycheck deduction. The United States employs a progressive tax system, meaning higher income levels are subject to higher marginal tax rates. Employers are responsible for calculating and remitting this tax to the Internal Revenue Service (IRS) on behalf of their employees.

The amount withheld is primarily determined by information on an employee’s Form W-4, Employee’s Withholding Certificate. This form guides employers on calculating withholding based on factors such as filing status, multiple jobs adjustments, and claims for dependents. For tax year 2025, federal income tax withholding tables will not be updated, and employers should continue using existing procedures for reporting and withholding.

Social Security and Medicare Taxes

Social Security and Medicare taxes, collectively known as Federal Insurance Contributions Act (FICA) taxes, are mandatory federal deductions from paychecks. These taxes fund government programs that provide retirement, disability, and healthcare benefits. Unlike federal income tax, FICA taxes apply at flat rates up to certain income thresholds.

For 2025, the employee’s share of Social Security tax is 6.2% of wages, up to an annual wage base limit of $176,100. Once an individual’s cumulative earnings for the year reach this limit, Social Security tax withholding ceases for the remainder of the calendar year. The Medicare tax rate for employees is 1.45% of all wages, with no wage base limit. An extra 0.9% Medicare tax applies to wages exceeding $200,000, bringing the total Medicare tax rate to 2.35% for earnings above this threshold.

Illinois State Income Tax Withholding

In Illinois, employees are subject to a state income tax withheld from their paychecks. Illinois imposes a flat income tax rate, meaning everyone pays the same percentage of their taxable income regardless of how much they earn. For 2025, the Illinois state income tax rate is 4.95%.

Employers calculate Illinois income tax withholding based on this flat rate and any applicable exemptions. Illinois does not levy local income taxes, which simplifies paycheck deductions for residents. The Illinois exemption allowance for 2025 is $2,850, which helps reduce the amount of income subject to state tax.

How Your W-4 and Pre-Tax Deductions Impact Withholding

The amount of federal and state income tax withheld is directly influenced by your Form W-4 and participation in certain benefit plans. Adjustments on the W-4 form significantly alter the amount an employer is instructed to withhold. For instance, claiming dependents reduces the amount withheld, while electing an additional dollar amount of withholding increases it. The form also includes sections for accounting for income from multiple jobs, which helps prevent under-withholding throughout the year.

Pre-tax deductions further reduce your taxable income before federal and state income taxes are calculated. Contributions to retirement plans, such as a 401(k) or 403(b), are common examples. Health insurance premiums paid through an employer-sponsored plan also typically fall into this category. By reducing your gross income for tax purposes, these deductions effectively lower the amount of federal and state income tax withheld from each paycheck.

Understanding Your Pay Stub

A pay stub serves as a detailed record of your earnings and deductions for a specific pay period and year-to-date. Employers are required to provide these itemized statements, and in Illinois, new amendments effective January 1, 2025, expand these requirements to include specific details like hours worked, pay rates, and deductions. Reviewing your pay stub regularly helps verify the accuracy of your pay and deductions.

Deductions for federal income tax often appear under abbreviations such as “FED,” “FIT,” “FITW,” or “FWT.” Social Security deductions may be labeled “SS,” “SOCSEC,” or “OASDI,” while Medicare deductions are commonly shown as “Med” or “HI.” For Illinois state income tax, you might see “STATE,” “SIT,” “SITW,” “ST,” “IL SIT,” or “IL Tax.” Pay stubs typically present both current pay period amounts and cumulative year-to-date (YTD) totals for all earnings and deductions.