Short answer. Illinois has reciprocal agreements with Iowa, Kentucky, Michigan and Wisconsin. A resident of one of them who works here gives the employer Form IL-W-5-NR and pays income tax on covered wages at home.
Illinois at a glance
- Income tax on wages
- Yes
- Agreements named
- Iowa, Kentucky, Michigan and Wisconsin
- What's covered
- Compensation paid to residents of the four states.
- Employee form
- Form IL-W-5-NR, Employee's Statement of Nonresidence in Illinois
- Nonresidents
- Withheld from unless an agreement or exemption applies
- Resident credit
- Stated
- Convenience rule
- Not stated on the pages we read
- Agency
- Illinois Department of Revenue
Illinois's agreement partners
| Partner | Other side | Their form | Conditions | Check |
|---|---|---|---|---|
| Iowa | Names this state too | 44-016 | None beyond the general ones | Live there, work here |
| Kentucky | Names this state too | 42A809 | None beyond the general ones | Live there, work here |
| Michigan | Names this state too | MI-W4 | None beyond the general ones | Live there, work here |
| Wisconsin | Names this state too | W-220 | None beyond the general ones | Live there, work here |
The form: IL-W-5-NR
Employee's Statement of Nonresidence in Illinois. A resident of Iowa, Kentucky, Michigan or Wisconsin completes it to be exempt from the state withholding. Without it, the employer must withhold Illinois tax.
"To be exempt from Illinois Income Tax withholding requirements you must complete Form IL-W-5-NR."
In the official words
"compensation paid to residents of Iowa, Kentucky, Michigan, and Wisconsin"
"If your employee does not complete this form, you must withhold Illinois Income Tax."
Credit for tax paid to other states
An Illinois resident can claim a credit for tax paid to another state on Schedule CR, Credit for Tax Paid to Other States. Wages from Iowa, Kentucky, Michigan or Wisconsin employers fall under the reciprocal agreements: those states don't tax them, and Illinois does.
Days and thresholds
Illinois Publication 130 ties nonresident compensation to performing significant service in Illinois for more than 30 working days (Form IL-W-6 is for nonresidents working in Illinois more than 30 working days in the year).
Not confirmed on the pages we read: a convenience of the employer rule.
Official sources
- Illinois Department of Revenue: Publication 130, Withholding Illinois Income Tax for My Employees (checked November 2026)
- Illinois Department of Revenue: I am an Illinois resident and earn wages in another state (checked November 2026)
General information, not tax advice. Checked November 2026 against the official pages listed above. Agreements, forms and thresholds change, and your own facts (where you lived, where you worked each day, other income) decide the answer; check with a tax professional for your situation. MCC Solutions is not a CPA firm and is not affiliated with any tax agency.
Questions about Illinois
Which states have a reciprocal agreement with Illinois?
Iowa, Kentucky, Michigan and Wisconsin. Illinois's page puts it this way: "compensation paid to residents of Iowa, Kentucky, Michigan, and Wisconsin."
Which form does a nonresident give a Illinois employer?
Form IL-W-5-NR, Employee's Statement of Nonresidence in Illinois. A resident of Iowa, Kentucky, Michigan or Wisconsin completes it to be exempt from Illinois withholding. Without it, the employer must withhold Illinois tax.
Does Illinois withhold from nonresidents from other states?
Yes, unless an agreement or exemption applies. The official wording: "If your employee does not complete this form, you must withhold Illinois Income Tax."
Do Illinois residents get credit for tax paid to another state?
An Illinois resident can claim a credit for tax paid to another state on Schedule CR, Credit for Tax Paid to Other States. Wages from Iowa, Kentucky, Michigan or Wisconsin employers fall under the reciprocal agreements: those states don't tax them, and Illinois does.
Is there a days-in-state rule for Illinois withholding?
Illinois Publication 130 ties nonresident compensation to performing significant service in Illinois for more than 30 working days (Form IL-W-6 is for nonresidents working in Illinois more than 30 working days in the year).
All states: reciprocity agreements by state · Live in one state, work in another · District of Columbia · Indiana