Illinois Payroll & Paycheck Tax Calculator

Before you can legally hire employees in Illinois, you’ll need to register with IDES for your State Unemployment Insurance (SUI) account. This is where you’ll pay mandatory unemployment insurance that funds benefits for workers who lose their jobs. Registration is straightforward through the MyTax Illinois portal. Most for-profit businesses employing workers in Illinois must register.

New employers pay 3.175% for construction businesses or 2.725% for all others on the first $13,590 of each employee’s wages.

Illinois’ flat tax might seem simple, but you’ve still got paperwork to manage. Here’s what you need:
• Federal W-4 and Illinois IL-W-4 forms for withholding
• IRS forms, including: Form 941 (Quarterly federal tax return) • Form 940 (Federal Unemployment Tax, FUTA) • W-2 and 1099 (Year-end wage reporting)
• New Hire Reports: File with the Illinois Department of Employment Security within 20 days
• Workers’ Compensation: Required for nearly all Illinois employers – get coverage before hiring
In Illinois, state workers’ compensation coverage is a requirement for all employers. Rather than having varying guidelines like other states, this is mandatory in the state, and it charges steep fines for those who fail to comply. Additionally, it can bring criminal charges against some employees for non-compliance.

Illinois’ minimum wage is $15 per hour as of 2025. For tipped employees, the minimum wage is $9 per hour, with tips expected to make up the difference.

Illinois follows federal overtime rules: non-exempt employees earn 1.5x their regular rate after 40 hours per week. There’s no daily overtime requirement, and no mandatory overtime pay for weekends or holidays unless it pushes employees over 40 hours weekly.

Paid Leave: The “Paid Leave For All Workers Act” states that employers must provide employees with up to 40 hours of paid leave per year, which the employee can use for any reason. This is based on employees accruing one hour of leave for every 40 hours worked.

Although most employers follow a weekly pay schedule, in Illinois, they have flexibility in pay schedules with a minimum of semi-monthly payments. Most employers choose weekly, bi-weekly, or semi-monthly schedules. Final paychecks for terminated employees must be paid by the next scheduled payday. For employees who quit, the same rule applies: the next regular payday, the employee’s last paycheck must include all earned wages, plus any accrued and unused vacation time, as per the company’s policy.

Illinois doesn’t mandate paid time off, sick leave, or vacation (though Chicago and Cook County have their own paid sick leave ordinances). If you offer PTO as a benefit, you must honor your policy as it becomes part of the employment contract.

Thanks to Illinois’ flat 4.95% income tax rate, calculations are more straightforward than in states with progressive tax brackets. But you still need to account for:
• Federal income tax withholding
• Illinois state income tax (4.95% flat rate)
• FICA taxes (Social Security and Medicare)
• Unemployment taxes (FUTA and SUI)
Our calculator handles all these calculations instantly, giving you and your employees a clear picture of gross pay, deductions, and take-home pay.

Illinois employers must file quarterly wage reports through MyTax Illinois, even if no wages were paid that quarter. Remember that employers pay entirely SUI taxes – nothing comes out of employee paychecks for unemployment insurance.

Key filing deadlines:
• Quarterly IL-941 returns: Due to the last day of the month following each quarter
• Withholding deposits: Monthly or semi-monthly, depending on your withholding amount
• Annual reconciliation (IL-W-3): Due January 31st
After 3 years in business, your SUI rate will adjust based on your experience rating, potentially dropping as low as 0.625% or rising to 7.375%.