How to Calculate Your Illinois Exemption Allowance

An Illinois exemption allowance is a specific dollar amount that reduces your taxable income for state purposes. This directly impacts the amount of state income tax your employer withholds from your paycheck. Each allowance you claim lowers the portion of your wages subject to tax, which can adjust your take-home pay.

Calculating Your Illinois Allowances

For the 2025 tax year, each Illinois exemption allowance reduces your taxable income by $2,850. This figure is subject to an annual cost-of-living adjustment. The exemption allowance is not permitted for taxpayers with a federal adjusted gross income over $250,000 for single filers or $500,000 for those married filing jointly. If your income is below these thresholds, every taxpayer can claim one personal allowance for themselves. If you are married and filing a joint tax return, you can claim an additional allowance for your spouse.

You may also claim an allowance for each dependent you are eligible to claim on your federal tax return. Illinois provides for additional allowances. Taxpayers who are age 65 or older can claim an extra allowance, as can their spouse if they also meet the age requirement. An additional allowance is also available for taxpayers who are legally blind, with a similar provision for a legally blind spouse. These are each worth an additional $1,000 exemption.

If you can be claimed as a dependent on someone else’s tax return, you may only claim a personal exemption for yourself if your own Illinois base income is not more than the exemption amount of $2,850. If your income is higher than that, you cannot claim the exemption. This is a common scenario for students or young adults who are still financially supported by their parents.

Completing the Illinois Withholding Form

To set your state tax withholding, you must use Form IL-W-4, the Employee’s and other Payee’s Illinois Withholding Allowance Certificate. You can obtain this form from your employer’s human resources department or download it from the Illinois Department of Revenue’s website.

On Line 1 of Form IL-W-4, you will enter the total number of allowances you are entitled to claim. This single number communicates your exemption status to your employer’s payroll system.

Line 2 allows you to request that an additional amount of money be withheld from each paycheck, which can cover other income not subject to withholding. Line 3 is used to claim a complete exemption from Illinois withholding, but this is only permissible if you had no tax liability last year and expect no liability in the current year.

Submitting Your Form to an Employer

After you have filled out and signed your Form IL-W-4, submit it to your employer. Your employer will use the information to update their payroll system and ensure the correct amount of state tax is withheld.

It is important to revisit your Form IL-W-4 after certain life events occur, as your eligibility for allowances can change. You should complete and submit a new form if you get married or divorced, have or adopt a child, or if a spouse starts or stops working. You should also file a new form if you are no longer eligible to be claimed as a dependent on another person’s tax return.