IL-IA reciprocity covers the Quad Cities (Moline/Rock Island IL - Davenport/Bettendorf IA) and Dubuque/Galena corridors. Iowa has exactly one reciprocity agreement, and it is with Illinois.
| Scenario | Form To File | Result |
|---|---|---|
| Live IL, work IA | IA 44-016 (to skip IA) | No IA withholding. Pay IL tax only. |
| Live IA, work IL | IL-W-5-NR (to skip IL) | No IL withholding. Pay IA tax only. |
OBBBA 2026 (One Big Beautiful Bill Act) raised the federal SALT cap to $40,000. This matters for reciprocity commuters who itemize: your full home-state income tax is now more likely to be fully deductible on federal Schedule A, making the state-level tax difference between your home and work state a real after-tax driver of commute value. Check each state rate: IL top rate 4.95% flat, IA top rate 3.8% flat.
Illinois only. Iowa’s sole reciprocity agreement is with Illinois. Iowa residents working in any other state (including Nebraska, Missouri, Minnesota, South Dakota, Wisconsin) must withhold in the work state and claim a credit on the IA return.
File IA form 44-016 (Employee’s Statement of Nonresidence in Iowa) with your Iowa employer. The employer keeps it on file and stops withholding Iowa tax. Keep a copy for your records.
No. Iowa’s move to a 3.8% flat rate (effective 2025) does not affect the agreement. IL residents working in IA still pay IL’s 4.95% flat rate on those wages; IA residents working in IL still pay Iowa’s 3.8%.
No. Reciprocity covers W-2 wages and salaries only. Iowa-source gambling winnings of an IL resident remain taxable by Iowa and may require an IA nonresident return. The same applies to IA rental income or business income.
File an Iowa nonresident return for the year (IA 1040 with the IA 126 nonresident credit schedule) reporting the wages as exempt under reciprocity to get a full refund. Then submit form 44-016 now so the rest of the year withholds Illinois tax instead.
See exact post-reciprocity paycheck with IL or IA withholding.
Paycheck Calculator →Run the numbers for each state: Illinois Income Tax Calculator · Iowa Income Tax Calculator
Tax calculations are estimates for educational and informational purposes only. This site does not provide tax, legal, or financial advice. Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. Data sourced from IRS publications and official state tax authority websites.
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