Illinois Reciprocal Agreement States: A Guide for Taxpayers

Taxpayers often have to pay income tax in multiple states due to various reasons such as working remotely or having multiple sources of income. This can be a confusing and time-consuming process, but thankfully, there are reciprocal agreements between certain states that make filing taxes easier.

Illinois is one such state that has reciprocal agreements with several other states. This means that if you live in one of these states and work in Illinois, you will only have to pay income tax in your state of residence and not in Illinois. Let`s take a closer look at these Illinois reciprocal agreement states.

Iowa

Illinois has a reciprocal agreement with Iowa, which means that if you live in Iowa and work in Illinois, you will only have to pay income tax in Iowa. Likewise, if you live in Illinois and work in Iowa, you will only have to pay income tax in Illinois.

Kentucky

If you live in Kentucky and work in Illinois, you will only have to pay income tax in Kentucky. However, if you live in Illinois and work in Kentucky, you will have to pay income tax in both states.

Michigan

Illinois has a reciprocal agreement with Michigan, which means that if you live in Michigan and work in Illinois, you will only have to pay income tax in Michigan. Likewise, if you live in Illinois and work in Michigan, you will only have to pay income tax in Illinois.

Missouri

If you live in Missouri and work in Illinois, you will only have to pay income tax in Missouri. However, if you live in Illinois and work in Missouri, you will have to pay income tax in both states.

Wisconsin

Illinois has a reciprocal agreement with Wisconsin, which means that if you live in Wisconsin and work in Illinois, you will only have to pay income tax in Wisconsin. Likewise, if you live in Illinois and work in Wisconsin, you will only have to pay income tax in Illinois.

It is important to note that these reciprocal agreements only apply to earned income. If you receive income from sources such as rental properties or investments, you will still have to pay taxes in both states.

In conclusion, if you live in one of the Illinois reciprocal agreement states and work in Illinois, you only have to pay income tax in your state of residence. This can simplify your tax filing process and potentially save you money. However, it is important to stay informed about the tax laws and regulations in both states to avoid any complications.