How Much Taxes Does Illinois Take Out of a Paycheck?

Your paycheck includes various deductions that reduce your gross earnings to your net take-home pay. Some are federal, like Social Security and Medicare, while others are specific to your state of residence and work. Understanding state-specific deductions helps you comprehend your financial picture. This article focuses on the taxes and other withholdings Illinois typically takes out of a paycheck.

Illinois State Income Tax Calculation

Illinois imposes a flat income tax rate on all taxable income. For 2024 and 2025, the Illinois state income tax rate is 4.95%. This rate applies to your taxable income, which is your gross income minus any allowable deductions and exemptions.

Unlike the federal income tax system, Illinois does not use a progressive tax bracket system. This simplifies the calculation, as there is no need to determine which income tier applies to your earnings. Illinois also does not rely on complex withholding allowance calculations based on federal W-4 forms for state tax purposes.

Illinois does not have a standard deduction in the traditional sense, but it offers an exemption allowance that reduces your taxable income. For the 2024 tax year, the personal exemption allowance is $2,775 per individual, increasing to $2,850 for 2025. This exemption can be claimed for yourself, your spouse if filing jointly, and each dependent, further lowering the income subject to the 4.95% flat tax. Beyond the personal exemption, Illinois provides specific subtractions from income, such as certain contributions to college savings accounts or ABLE accounts, which also reduce your taxable income.

Other Illinois Paycheck Deductions and Non-Deductions

Beyond the state income tax, Illinois does not impose any local or municipal income taxes. This means you will not see city or county income tax deductions on your pay stub.

Regarding state unemployment insurance (UI), while Illinois maintains a robust UI system to provide benefits to eligible workers, the contributions for this system are typically paid by employers. Employees generally do not have UI contributions deducted directly from their paychecks in Illinois. Similarly, Illinois does not have a state-mandated employee-funded disability insurance or paid family leave program that results in regular paycheck deductions for most workers.

However, other less common state-mandated deductions can appear on a paycheck under specific circumstances. These are not general taxes for all employees but rather specific financial obligations. Examples include wage garnishments due to court orders, such as child support or outstanding debts, which employers are legally required to withhold.

How Your Gross Pay and Pre-Tax Deductions Affect Illinois Withholding

The amount of Illinois state income tax withheld from your paycheck is influenced by your gross pay and any pre-tax deductions you have. While Illinois applies a flat tax rate, the actual dollar amount of tax withheld will fluctuate with changes in your taxable income. Reducing your taxable income results in a lower amount of state tax withheld.

Pre-tax deductions play a significant role in lowering your taxable income for Illinois state tax purposes. Common examples of these deductions include contributions to a 401(k) or 403(b) retirement plan, health insurance premiums paid through your employer’s plan, and contributions to Flexible Spending Accounts (FSAs) for healthcare or dependent care. These amounts are subtracted from your gross pay before the Illinois income tax is calculated, effectively reducing the base on which the 4.95% rate is applied.

For instance, if your gross pay is $1,000 and you have $100 in pre-tax deductions, your taxable income for Illinois would be $900. The 4.95% tax would then be calculated on this lower amount, resulting in $44.55 withheld. Without the pre-tax deductions, the tax on $1,000 would be $49.50. This mechanism allows employees to reduce their state tax liability by utilizing eligible pre-tax benefits, even within a flat tax system.

Reading Your Pay Stub for Illinois Taxes

Identifying your Illinois tax deductions on your pay stub is a straightforward process once you know what to look for. Employers typically use specific labels or abbreviations to denote state income tax withholdings. Common examples you might see include “IL SIT” (Illinois State Income Tax), “IL WH” (Illinois Withholding), or simply “Illinois Tax.”

These deductions are usually listed in a section dedicated to “State Taxes” or “Deductions.” Your pay stub will also often show year-to-date (YTD) totals for each deduction. Reviewing these YTD figures can help you track how much state tax you have paid over the year. Regularly comparing the amount withheld on your pay stub with your own calculations, considering your gross pay and any pre-tax deductions, can help ensure accuracy.