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REMOTE EMPLOYEES

Hiring a remote employee in Illinois

Your company is in another state and one employee lives and works from home in Illinois. Which state's taxes apply, unemployment, paid leave and Illinois's employer rules, each with its official source.

Facts checked on October 5, 2026 against the official sources listed at the end of this page. For employers. General information, not legal or tax advice: confirm a rule with the agency before you rely on it.

Illinois at a glance

Income tax
Illinois withholding
Reciprocity
With Iowa, Kentucky, Michigan and Wisconsin
Unemployment
$14,250 wage base, 3.35% new employer
Paid leave
None
New hire report
Within 20 days

Which state's taxes apply

Work state
Illinois taxes wages for work done in Illinois. Withhold Illinois income tax on the employee's wages.Source: IDOR, Publication 130 (February 2026) (PDF) (opens in a new tab), checked October 5, 2026
Withholding form
Form IL-W-4Source: IDOR, Form IL-W-4, Employee's and other Payee's Illinois Withholding Allowance Certificate (PDF) (opens in a new tab), checked October 5, 2026
Reciprocity
If your office is in Iowa: Illinois residents working there are withheld for Illinois, with Form 44-016, Employee's Statement of Nonresidence in Iowa. If your office is in Kentucky: Illinois residents working there are withheld for Illinois, with Form K-4 (box 4) or 42A809. If your office is in Michigan: Illinois residents working there are withheld for Illinois, with MI-W4 (line 8b). If your office is in Wisconsin: Illinois residents working there are withheld for Illinois, with Form W-220.Source: Iowa Department of Revenue, Iowa-Illinois Reciprocal Agreement (opens in a new tab), checked October 5, 2026; Kentucky Department of Revenue, Form K-4 Kentucky's Withholding Certificate 2026, 42A804(12-2025) (PDF) (opens in a new tab), checked October 5, 2026; Michigan Treasury, Form 446, 2026 Michigan Income Tax Withholding Guide (Rev. 02-26, PDF) (opens in a new tab), checked October 5, 2026; Wisconsin DOR, Form W-220, Nonresident Employee's Withholding Reciprocity Declaration (R. 7-22, PDF) (opens in a new tab), checked October 5, 2026
Convenience rules
If your company is in Delaware, New York or Pennsylvania, the employee is assigned to an office there and works there on some days, that state taxes the days worked from home in Illinois for the employee's convenience.Source: Delaware Division of Revenue, 2025 Form PIT-NON Instructions, Non-Resident Individual Income Tax Return (PDF) (opens in a new tab), checked October 6, 2026; NYS DTF, TSB-M-06(5)I, New York Tax Treatment of Nonresidents and Part-Year Residents: Application of the Convenience of the Employer Test to Telecommuters and Others (May 15, 2006, PDF) (opens in a new tab), checked October 6, 2026; PA Department of Revenue, PA Personal Income Tax Guide, Gross Compensation (opens in a new tab), checked October 6, 2026
Office days in your company's state
That state's day limit, if it has one, decides whether it withholds on those days: see its page, or the helper below.
An employee from another state working in Illinois
Illinois has a 30-day rule: no Illinois withholding for a nonresident who works in Illinois 30 days a year or fewer, if the rule's other conditions are met.Source: IDOR, Publication 130 (February 2026) (PDF) (opens in a new tab), checked October 5, 2026

Where to withhold: two states

Pick your company's state, the state where the employee lives and works from home, and the days a year the employee works at your office. The answer reads each state's rules from the data on these pages.

Your company is in
Employee lives and works from home in
Days a year at your office
Assigned to an employer office in New YorkMatters only in the states with a convenience rule (Connecticut, Delaware, New Jersey, New York and Pennsylvania), and only with office days there.

Income tax withholding

  • Illinois: all wages.

No New York withholding: the employee does no work in New York.

Unemployment

Illinois: the employee works from home there, so the work is localized in Illinois.

Simplified: resident credits, dollar tests, local taxes and a move during the year are not worked out here. Each state's rule and its source are on its page.

Unemployment

The employee works from home in Illinois, so the work is localized in Illinois: pay Illinois unemployment tax, not your company state's.

Agency
Illinois Department of Employment Security (IDES)Source: IDES, Employer Tax Information (opens in a new tab), checked October 5, 2026
Wage base
$14,250 Fixed by law $14,592 from January 1, 2027Source: IDES, EA-50 2026 State Experience Factor and Employers' UI Contribution Rates (PDF) (opens in a new tab), checked October 5, 2026
New employer rate
3.35% 3.35%, or 3.45% for NAICS sector 56 (Administrative Support & Waste Management) Surcharges includedSource: IDES, EA-50 2026 State Experience Factor and Employers' UI Contribution Rates (PDF) (opens in a new tab), checked October 5, 2026

Open the account: Illinois payroll tax registration

Illinois has no paid leave program funded through payroll.

Illinois employer rules

Employment law applies where the employee works, so these follow the employee into Illinois.

Final pay
Fired: next regularly scheduled payday Quit: next regularly scheduled paydaySource: IDOL, Illinois Wage Payment and Collection Act FAQ (opens in a new tab), checked October 5, 2026
Pay frequency
At least semi-monthly, no later than 13 days after the pay period ends; FLSA-exempt executive, administrative and professional staff and commissions may be paid monthly.Source: IDOL, Illinois Wage Payment and Collection Act FAQ (opens in a new tab), checked October 5, 2026
Pay notice
At hire, tell employees the rate of pay and the time and place of payment, in writing and acknowledged by both parties whenever possible; notify any change before it takes effect.Source: Illinois General Assembly, 820 ILCS 115/10, Wage Payment and Collection Act (opens in a new tab), checked October 5, 2026
New hire reporting
Within 20 days of the start date.Source: IDES, New Hire Reporting (opens in a new tab), checked October 5, 2026
E-Verify
No state E-Verify mandate. Illinois's rules for employers enrolled in E-Verify (820 ILCS 55/12 and 55/13) were repealed on December 12, 2025; an employer that gets a no-match letter must still notify the employee within 5 business days and may not act on the letter alone (820 ILCS 55/14).Source: Illinois General Assembly, Public Act 104-0455 (SB 2339), Right to Privacy in the Workplace Act (PDF) (opens in a new tab), checked October 5, 2026
Sick leave
Paid sick leave required, from the first employee.Source: IDOL, Paid Leave for All Workers Act FAQ (opens in a new tab), checked October 5, 2026

When the employee moves

Re-check the work state and the registrations before the next payroll: a move changes which state's withholding, unemployment, paid leave and employer rules apply.

Registering your business in Illinois, and whether one remote employee creates tax nexus for your company, are separate questions this page does not cover.

More on Illinois

WORKLIO HCM

Payroll for employees who work from home in another state

Worklio HCM withholds by home and work state, reciprocity included, and handles city and county taxes. We help open state withholding and unemployment accounts when you hire somewhere new, and our registration service can register your employer tax accounts for you. Taxes are calculated, deposited and filed in every state and locality, and when an agency notice arrives, you upload it and our tax team resolves it.

Remote employees in other states

Sources

The agency page or document behind each fact, as checked.

General information, not legal or tax advice. Rules change; confirm current requirements with the relevant agency or your advisor. You remain responsible for your employment taxes and for each state's rules.

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