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Covers the payroll obligations of Illinois employers, including flat-rate state income tax withholding, unemployment contributions to IDES and new hire reporting. Also explains the Illinois Secure Choice requirement for employers without a qualified retirement plan.
Illinois employers withhold a flat 4.95% state income tax on wages, pay state unemployment insurance contributions to IDES, report new hires within 20 days, and must facilitate Illinois Secure Choice if they have no qualified retirement plan.
Last updated in source: 09/05/2025.
Illinois has a flat individual income tax applied to wages, requires employer contributions for state unemployment insurance (SUI/UC), mandates new-hire reporting, and enforces a state retirement-access facilitation program (Illinois Secure Choice) for many employers without plans. Major cities and Cook County have supplemental paid-leave rules and some local business taxes, but Illinois does not have a widespread local personal income tax system like some states.
Employers must withhold Illinois income tax on wages and remit per Illinois Department of Revenue (IDOR) rules, using Forms IL-941/IL-501 and MyTax Illinois e-filing. The wage withholding rate is a flat 4.95%.
Employers pay Illinois UI contributions. The 2025 taxable wage base and historical rate tables are published by the Illinois Department of Employment Security (IDES); the IDES 2025 tables show a $13,916 wage base as an example. Employer rates vary by experience/class and new-employer schedules. File and pay via IDES/MyTax Illinois.
Illinois does not require employee withholding for SUI like some states — the employer is responsible for SUI contributions per IDES guidance. Confirm account-specific liabilities on IDES.
Report new hires and rehires to the Illinois New Hire Directory within 20 calendar days of the employee's first day of work. This is used for child-support enforcement and employer reporting compliance.
Illinois law requires up to 40 hours of paid leave per year, accrued at 1 hour per 40 hours worked, usable for any reason. Employers with existing PTO policies may satisfy PLAWA if they meet or exceed PLAWA minimums and comply with notice, posting and recordkeeping requirements. See IDOL PLAWA guidance for covered employee definitions and exemptions.
Important: PLAWA does not replace local laws. Where employees work in Chicago or Cook County, follow the stricter or covering rule.
Employers with 5 or more employees that have been in business two or more years and do not offer a qualified retirement plan must facilitate Secure Choice or offer their own qualified plan. Employers facilitate payroll deductions for employees who do not opt out. IDOR enforces penalties for noncompliance. Review eligibility, registration deadlines, payroll-deduction mechanics, employee notices and possible penalties.
Unless an exemption applies, nonexempt employees must receive time-and-one-half pay for hours worked over 40 in a workweek under the federal FLSA. Illinois enforces overtime consistent with the FLSA and the Illinois Minimum Wage Law; employers must apply both federal and state rules and follow the stricter standard where applicable. Illinois has specific tipped-wage rules (tip credit limits). For industry-specific issues such as restaurant/hospitality, healthcare or agricultural exceptions, consult IDOL and DOL guidance.
Illinois does not require private-sector employers to provide paid meal or rest breaks beyond federal guidance. However, short breaks of roughly 20 minutes or less are generally compensable if provided. Follow IDOL/DOL guidance and any sector-specific rules or collective-bargaining obligations.
The Illinois Wage Payment and Collection Act (IWPCA) requires employers to pay wages timely — most employees are paid at least semi-monthly with no more than 13 days between paydays in typical cases. Final wages for separations must be paid by the next scheduled payday, or immediately when required by statute or circumstance. Employers must comply with IWPCA rules for vacation payout, deductions and recordkeeping.
Follow the Illinois Wage Payment and Collection Act and federal garnishment rules for child support and court orders. Voluntary deductions require proper written authorization. See IDOL and Illinois statutes for permitted deductions and enforcement remedies.
Employers must retain payroll, time, tax and leave records per IDOL, IDES, IDOR and FLSA requirements. Post required notices (IDOL, PLAWA, and Chicago/Cook County posters) at worksites and make policies available as required.
Illinois applies a flat 4.95% rate for wage withholding. Employers withhold Illinois income tax on wages and remit it per Illinois Department of Revenue rules using Forms IL-941 and IL-501 through MyTax Illinois.
No. Illinois does not require employee withholding for state unemployment insurance; the employer is responsible for SUI contributions under IDES guidance. The 2025 taxable wage base shown in the IDES tables is $13,916, and employer rates vary by experience, class and new-employer schedule.
New hires and rehires must be reported to the Illinois New Hire Directory within 20 calendar days of the employee's first day of work. The reporting supports child-support enforcement and employer reporting compliance.
PLAWA requires up to 40 hours of paid leave per year, accrued at 1 hour for every 40 hours worked, and it can be used for any reason. Employers with existing PTO policies may satisfy PLAWA if those policies meet or exceed the minimums and comply with notice, posting and recordkeeping rules.
Employers with 5 or more employees that have been in business two or more years and do not offer a qualified retirement plan must facilitate Secure Choice or offer their own qualified plan. Employers facilitate payroll deductions for employees who do not opt out, and the Illinois Department of Revenue enforces penalties for noncompliance.