IL-WI Tax Reciprocity 2026

IL-WI reciprocity covers the Chicago/Kenosha and Rockford/Beloit commuter corridors.

Quick answer: Yes, active reciprocity. IL residents working in WI file W-220 (WI Certificate of Nonresidence). WI residents working in IL file IL-W-5-NR.

How It Works Both Directions

ScenarioForm To FileResult
Live IL, work WIW-220 (to skip WI)No WI withholding. Pay IL tax only.
Live WI, work ILIL-W-5-NR (to skip IL)No IL withholding. Pay WI tax only.

Worked Example

Ben lives in Kenosha WI, works in Waukegan IL, earns $68,000. With reciprocity: files IL-W-5-NR with IL employer. IL withholds $0. WI withholds ~$3,950 (graduated, ~5.8% effective). He files only WI resident return. Without: IL would withhold 4.95% flat = $3,366, WI would tax him too and he'd claim credit — ending up owing the extra $600 to WI anyway.

Step-by-Step: Claim the Exemption

  1. Download the work-state exemption form (WI form W-220 for IL-residents-working-in-WI; IL form IL-W-5-NR for WI-residents-working-in-IL).
  2. Fill in name, SSN, home address (must be in the reciprocity state), and current date.
  3. Submit to HR/payroll at your employer.
  4. Verify on your next paystub that work-state tax withholding is $0.
  5. Update your home-state W-4 to make sure you withhold enough for full income tax.
  6. File only a resident return in your home state next April (unless you have non-wage work-state income).

OBBBA 2026 Note

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, WI top rate 7.65% top.

FAQ

Does IL-WI reciprocity save money or just paperwork?

Primarily paperwork. Tax liability is determined by home-state rates either way (credit covers the difference). Savings are ~$50–$150 in avoided nonresident filing fees/software upgrades.

Which form does a WI resident working in IL file?

File IL form IL-W-5-NR (Employee’s Statement of Nonresidence in Illinois). IL employer stops IL state withholding. You withhold to WI instead.

Does reciprocity cover Chicago city tax?

Chicago has no municipal income tax (the proposed ‘Bring Chicago Home’ transfer tax was rejected in 2024). No reciprocity issues for Chicago-area commuters.

Are Milwaukee commuters covered?

Yes. WI residents working in Milwaukee have no interstate issues (in-state). IL residents working in Milwaukee file W-220 to skip WI withholding.

Is IL’s flat 4.95% rate changing?

IL passed a graduated-rate constitutional amendment in 2020 that was defeated. For 2026, IL remains at 4.95% flat. No changes pending.

Model Your Take-Home

See exact post-reciprocity paycheck with IL or WI withholding.

Paycheck Calculator →
Other reciprocity pairs:
NJ-PA · VA-DC · MD-DC · MD-VA · MD-PA · PA-OH · Full matrix

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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