Living in Illinois, working in Iowa
Reciprocal agreement · tax year 2026
You pay Illinois
$3,320
on a seventy-thousand wage
Iowa would want
$2,048
The agreement is worth
$0
in money — the gain is one return, not two
File this
44-016
with your employer
What the agreement does for you
- Here is the honest answer for Illinois to Iowa: this agreement saves you paperwork, not money. Illinois charges $3,320 on a seventy-thousand-dollar wage and Iowa would charge $2,048 — less. You would have ended up paying the Illinois amount either way. What you gain is one tax return instead of two, and the right state taking the right amount out of every paycheck.
- It does not stay the same as you earn more. On forty-five thousand dollars the Illinois bill is $2,083; on a hundred thousand it is $4,805. Iowa would have charged $3,188 at that higher wage. The two states pull apart as the salary rises, which is why this matters more to a senior job than a starter one.
- One piece of paper stands between you and this. Your employer needs the Iowa exemption certificate from you, usually once a year. Without it they must keep withholding Iowa tax from a Illinois resident. You would then be filing a return there after all.
- For this direction the agreement is procedural rather than pecuniary. Illinois's charge of $3,320 at seventy thousand dollars exceeds Iowa's $2,048, so the resident-credit mechanism would have produced the same total liability without any agreement at all. ⭐ The benefit is real but administrative: a single return rather than a resident-plus-nonresident pair, correct withholding through the year instead of a refund claim against the work state, and no cash-flow cost from over-withholding.
- The differential is income-dependent rather than fixed. Illinois's liability runs $2,083 at forty-five thousand dollars and $4,805 at one hundred thousand, against $3,188 in Iowa at the upper figure. Where one state applies a flat rate and the other a graduated schedule the gap widens or narrows monotonically with income, so a single-salary comparison understates how much the pairing matters across a career.
- The benefit is conditional on filing the exemption certificate with the employer, typically renewed annually. ⚠️ Employer withholding defaults to the work state in its absence, irrespective of eligibility, and the remedy is a nonresident return in Iowa. The practical failure mode is therefore not ineligibility but non-election — the agreement exists and the commuter simply never claims it.
What lands in your account
A $75,000 salary
Filing as
Paid
$2,232per paycheck
| Take-home, year | $58,025 |
|---|---|
| Tax, year | $16,975 |
| Share of pay taxed | 22.63% |
This is an average rate across all your pay — not the rate on your next dollar.
Illinois against Iowa
A $75,000 salary
Compare with
+$8,168a year in Iowa, once local prices are leveled
| Measure | Illinois | Iowa |
|---|---|---|
| Take-home pay | $58,025 | $59,354 |
| Worth after local prices | $58,697 | $66,865 |
| Share of pay taxed | 22.63% | 20.86% |
| State sales tax | 6.25% | 6% |
| Groceries exempt here | Yes | Yes |
| Clothing exempt at $100 | No | No |
| Property tax rate | 2.01% | 1.39% |
| Price level | 98.9 | 88.8 |
| Housing prices | 92.4 | 66 |
| Fuel tax | 49.6¢ | 30¢ |
| Tobacco tax | $2.98 | $1.36 |
City income tax excluded. Sales-tax row: state-only. Exemptions: Illinois, Statewide average; Iowa, Statewide average. Clothing: one $100 item; higher prices can change tax.
What you would need there
A $75,000 salary
Moving to
$64,418in Iowa, for the same life
| To match take-home only | $73,002 |
|---|---|
| You could take a cut of | −$10,582 |
| Prices in Iowa | 89 vs 99 |
State taxes and state price levels only. No city tax, and no housing market.
What each state would charge, across the ladder
Reference wages for a single filer, not a claim about anyone's salary. The last column is the difference the agreement actually removes — which is the gap between the two states, not Iowa's whole charge.
| Wage | Illinois charges | Iowa would charge | Agreement is worth |
|---|---|---|---|
| $45,000 | $2,083 | $1,098 | $0 |
| $70,000 | $3,320 | $2,048 | $0 |
| $100,000 | $4,805 | $3,188 | $0 |
What this page cannot tell you
- This covers wages from a job. It does not cover self-employment, rent or investment income — those follow the ordinary rules for Iowa.
- ⚠️ And it is a deal between two states. City and county taxes are not part of it, and several of these states have them.
- Every agreement in this dataset applies to wages and salaries only. Business, rental, gain and investment income sourced to Iowa remains taxable there under ordinary nonresident rules, and a commuter with such income may still owe a Iowa return notwithstanding the agreement.
- ⚠️ Reciprocity binds the state layer only and commonly does NOT extend to municipal or county income taxes — Pennsylvania's local earned income tax is the standard example, remaining payable at the place of employment despite the state-level agreement. Local liabilities are excluded from every figure on this page.