To calculate your net pay or take-home pay in Illinois, enter your period or annual income and the required federal, state, and local W4 information into our free online payroll calculator. Illinois's flat income tax rate is 4.95%, but no local income taxes.
Illinois, A home to world's famous city; Chicago and the very first McDonald's, which you, me, and everyone loves.
This midwestern state is not just about big city living. It has a wide variety of wonders, attractions, and opportunities. Moreover, it also has features like a variety of seasons, unique food trends, numerous museums & rich history, freshwater beaches, and plenty of genuinely groovin' music scenes and sports.
Apart from these tourist attractions, this state offers various job opportunities, especially for Physicians and surgeons, JavaScript developers, Software Developers, machine engineers and developers, food scientists, and much more.
Along with a good job and wonderful outdoor, you'll also be needing a house when you make your move. The median home value of in Illinois is under $185,000, and median rent being $1,550, you won't find it challenging to find an affordable house for you and your family. However, this state has the second-highest effective real-estate tax in the country with a rate of 2.32%.
The cost of living in this state is higher than the national average in some counties but is ranks 21st for the cost of living among other U.S. states (According to 2019 MERIC data series). Therefore, it is still quite reasonable as compared to other cities and states like Los Angeles, New York City, and San Francisco.
Another important factor one must know before moving to Illinois is the quality of education. This state ranks in the top third of the US in K-12 education, with top-notch schools, colleges, and universities, especially in Chicago.
Besides, all the perks, as mentioned earlier, this state also some cons like high property taxes, intense winters, heavy traffic, and weird laws like getting arrested for making faces at a dog.
So, if have made up your mind for moving to this 6th most populous state (12.8 million), and start your new life with a new house, plans, and business or job, then there's a lot to consider, including to what you are going to take home in paycheck as an employee or pay in paycheck as an employer. Wherefore, you must continue reading to know everything about How to calculate Paycheck in Illinois.
To calculate Take Home Pay or Paycheck, you need to go through several steps that include calculation of Gross Pay, Pre-Tax Deductions, Federal Taxes, State Taxes, Post Tax Deductions, Local Tax, etc.
To make it easy for you, we have divided this guide into steps, which would give a general idea. However, there may be some differences or additional taxes that you may be subjected to, according to your situation. As it's a comprehensive guide, we can only discuss general aspects.
Hourly Base Employees are paid for each hour they work in a day or a week, at the mutually agreed hourly rate. However, the mutually agreed hourly rate must be as per the Federal and State Minimum Wage law.
Hourly Employees are also entitled to receive overtime, for each excess hours worked after Regular worked hours in a day or week. The overtime rate in most of the states is one and a half times the regular hourly rate.
Salaried employees receive a fixed but mutually agreed on pay, for a decided pay frequency, usually semi-monthly or monthly. However, for gross payment determination for a pay period, the annual salary is divided by the pay frequency.
Most of the salaried employees are exempted from Overtime law. Therefore, they are not entitled to receive overtime, regardless of how many excess hours they work. However, some exceptional salaried employees may be eligible to receive overtime according to federal or state law.
A pre-tax deduction is an amount deducted from employee's gross pay before any withholding tax is deducted. These deductions have several advantages, including the reduction of taxable wages. Hence, increasing the take-home pay of an employee. However, not all deductions can be considered as free from all taxes, which means some of the deductions may require specific taxes to be withheld.
Some of the standard Pre-tax deductions are:
Note: Pre-Tax deduction rate changes from year to year, according to inflation and costs of living by the federal government. Therefore, you must keep yourself updated with all rates before making any deductions.
Federal Taxes are taxes deducted from almost every employee, regardless of which state or county they work in.
Federal Taxes are calculated according to the details provided by the employee on Form W-4, which comprises of income, filing status, number of dependents, number of allowances, number of jobs, etc.
The details are form W-4, are assessed and used by the employer to deduce the federal tax bracket, in which the employee's taxable wage lay upon.
Federal Taxes ranges from 0% to 37% have seven tax brackets, depending on filing status, income, and the number of allowances claimed. Below is the income tax details for the year 2023:
Taxable Income | Rate |
---|---|
$0 - $9,700 | 10% |
$9,700 - $39,475 | 12% |
$39,475 - $84,200 | 22% |
$84,200 - $160,725 | 24% |
$160,725 - $204,100 | 32% |
$204,100 - $510,300 | 35% |
$510,300+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $19,400 | 10% |
$19,400 - $78,950 | 12% |
$78,950 - $168,400 | 22% |
$168,400 - $321,450 | 24% |
$321,450 - $408,200 | 32% |
$408,200 - $612,350 | 35% |
$612,350+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $9,700 | 10% |
$9,700 - $39,475 | 12% |
$39,475 - $84,200 | 22% |
$84,200 - $160,725 | 24% |
$160,725 - $204,100 | 32% |
$204,100 - $306,175 | 35% |
$306,175+ | 37% |
Taxable Income | Rate |
---|---|
$0 - $13,850 | 10% |
$13,850 - $52,850 | 12% |
$52,850 - $84,200 | 22% |
$84,200 - $160,700 | 24% |
$160,700 - $204,100 | 32% |
$204,100 - $510,300 | 35% |
$510,300+ | 37% |
Note: Employees must make sure their information in Form W-4 is updated if any significant event takes place in their lives like a child's birth, divorce, or marriage. Moreover, they are also suggested to cautiously decide the number of Allowances that they need to claim, as more number of allowances claim can lead to penalties from the IRS and less than required number will lead to lower take-home pay.
Along with Federal Withholding, employers are also required to withhold Federal Insurance Contributions Act (FICA) taxes from the employee's paycheck as well as pay a matching amount themselves to the IRS.
There are two types of FICA taxes:
Employers are entitled to withhold 6.2% from the first $132,900 (wage base limit for 2023), taxable wages earned by the employee. Moreover, the employer is also required to pay an equal amount to the IRS for each employee.
Medicare tax is another type of FICA Tax that an employer must withhold from the taxable gross wage of the employee, at the rate of 1.45%. Unlike social security, there is no wage base limit. However, if the employee earns more than the defined threshold than he/she is subjected to an additional 0.9% of the Additional Medicare Tax rate, for every dollar earned above the threshold amount.
Like Social Security, IRS also requires the employer to pay an equal amount of Medicare tax for each employee.
The Federal Unemployment Tax Act (FUTA) is a tax that the IRS requires the employer to pay without deducting anything from the employee's paycheck.
The FUTA Tax rate for 2023 is 6.0% of the first taxable wage up to $7000 of an employee. However, once the taxable wage limit is crossed for a particular employee, then the employer no longer has to pay this tax.
What to reduce FUTA Tax?
Yes! Then you must pay State Unemployment Insurance (SUI) tax in full and on time and get a FUTA tax credit of up to 5.4%. Which means, you saved a whopping 90% from FUTA Tax.
Although, employers are not required to withhold any amount as a post-tax deduction, unless if an employee voluntarily asks to do so. However, there are some deductions ordered by the court like child support or wage garnishment, which the employer is entitled to deduct.
As you are done with your federal payroll taxes, now is time to withhold Illinois state income tax. This tax is to be withheld from the employee's paycheck. The state charges a flat rate of 4.95% for Income tax on its residents, regardless of income level and filing status.
Moreover, the supplemental wage tax rate, according to Illinois State, is also the same 4.95%.
Employers are required to withhold the amount based on the information, including the number of allowances to claim, provided by the employee in Form IL-W-4, in which an employee must update the form if any significant event takes place in their lives like child's birth, divorce or marriage.
No City or County of Illinois charges any Local Income Tax on its residents.
As the employees pay state Income Tax, the state also requires the employers to pay State Unemployment (SUI) Tax for each employee's first income of $12960. The tax rate range from 0.525 – 6.925% (includes 0.525% fund building surtax).
However, there is a piece of good news for new employers as they only have to pay on a flat rate of 3.225% (includes 0.525% fund building surtax) on the wages earned by each employee.
Note: Paying SUI taxes in full and on time, can get the employer, a FUTA tax credit of up to 5.4.
Once you are done with all elements (steps) discussed earlier, you will have a net pay amount for each employee. Now all you have to do is pay employees on time. Also, to file all Federal Taxes, State Taxes, FICA, and FUTA taxes on time, to avoid any penalties.
There are numerous legal ways through which you can increase your paycheck amount while working in Illinois. Here are a few of them:
Answer: Following are the taxes that are taken out from the employee's paycheck working in Illinois:
Answer: Yes, it is a High Tax State. According to business and economic forecasting publisher Kiplinger's new report, Illinois is the least "tax-friendly" state when combining the state income tax with all other taxes a resident has to pay.
Answer: $60000 a year after tax in Illinois would be $44,111 as you will be taxed with $15,888.
Answer: The Livable Hourly Salary for a single adult with no child is $31.54, and for a couple (one working) with one child is $24.83.
Answer: The Minimum Wage in Illinois is $8.25, and for tipped employees, it is $4.95, with a maximum tip credit of $3.30.
Answer: The Minimum wage in Chicago is $13 (in 2023).
Answer: Yes, The State Minimum wage for Illinois is scheduled to increase to $15 an hour in 2025.
Answer: A livable wage for a single adult with one child is $22.96, and for a single adult, it is $11.08.
Answer: Following are the Payroll Taxes that an employer and employee need to pay:
Answer: Illinois Residents are charged at a flat rate of 4.95% for State Income Tax, regardless of income level and filing status.
Answer: According to Illinois State Revenue, the standard deduction is not allowed in Illinois. However, they can claim a personal exemption of $2,175.