Living in Kentucky, working in Illinois
Reciprocal agreement · tax year 2026
You pay Kentucky
$2,332
on a seventy-thousand wage
Illinois would want
$3,320
The agreement is worth
$988
a year
File this
IL-W-5-NR
with your employer
What the agreement does for you
- Commuting from Kentucky into Illinois is one of the cases where this genuinely saves you something. At seventy thousand dollars, home wants $2,332 and Illinois wanted $3,320. You pay home. The difference, $988, stays in your pocket.
- The size of this depends on your pay. Kentucky charges $1,457 on forty-five thousand dollars and $3,382 on a hundred thousand. Against that, Illinois would have taken $4,805 at the higher figure. Check it against your own salary rather than the middle one.
- One piece of paper stands between you and this. Your employer needs the Illinois exemption certificate from you, usually once a year. Without it they must keep withholding Illinois tax from a Kentucky resident. You would then be filing a return there after all.
- Illinois taxes wages more heavily than Kentucky at this income, so the agreement is worth money rather than merely administration: $2,332 against $3,320 on seventy thousand dollars, a difference of $988. ⚠️ Note the direction-dependence — the reverse commute between the same two states carries no dollar benefit at all, because the credit mechanism already equalizes it.
- Liability under each schedule diverges with income: $1,457 and $3,382 in Kentucky at forty-five and one hundred thousand dollars respectively, against $4,805 in Illinois at the upper point. The relevant figure for any individual is therefore the one at their own wage — the mid-ladder comparison is illustrative of direction, not of magnitude.
- 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 Illinois. 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
$2,273per paycheck
| Take-home, year | $59,085 |
|---|---|
| Tax, year | $15,915 |
| Share of pay taxed | 21.22% |
This is an average rate across all your pay — not the rate on your next dollar.
Kentucky against Illinois
A $75,000 salary
Compare with
−$6,614a year in Illinois, once local prices are leveled
| Measure | Kentucky | Illinois |
|---|---|---|
| Take-home pay | $59,085 | $58,025 |
| Worth after local prices | $65,311 | $58,697 |
| Share of pay taxed | 21.22% | 22.63% |
| State sales tax | 6% | 6.25% |
| Groceries exempt here | Yes | Yes |
| Clothing exempt at $100 | No | No |
| Property tax rate | 0.75% | 2.01% |
| Price level | 90.5 | 98.9 |
| Housing prices | 62.9 | 92.4 |
| Fuel tax | 25¢ | 49.6¢ |
| Tobacco tax | $1.10 | $2.98 |
City income tax excluded. Sales-tax row: state-only. Exemptions: Kentucky, Statewide average; Illinois, Statewide average. Clothing: one $100 item; higher prices can change tax.
What you would need there
A $75,000 salary
Moving to
$84,997in Illinois, for the same life
| To match take-home only | $76,621 |
|---|---|
| Raise you would need | +$9,997 |
| Prices in Illinois | 99 vs 90 |
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 Illinois's whole charge.
| Wage | Kentucky charges | Illinois would charge | Agreement is worth |
|---|---|---|---|
| $45,000 | $1,457 | $2,083 | $625 |
| $70,000 | $2,332 | $3,320 | $988 |
| $100,000 | $3,382 | $4,805 | $1,423 |
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 Illinois.
- ⚠️ And it is a deal between two states. City and county taxes are not part of it, and several of these states have them.
- The comparison here assumes a single filer and treats both states as taxing the same income. Your own numbers will differ.
- Every agreement in this dataset applies to wages and salaries only. Business, rental, gain and investment income sourced to Illinois remains taxable there under ordinary nonresident rules, and a commuter with such income may still owe a Illinois 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.
- Figures are computed for a single filer at the stated wage, treating Kentucky's and Illinois's definitions of taxable income as equivalent and modeling the resident credit as limited to the home state's own liability. Real returns diverge on filing status, deductions each state allows separately, and credit limitation rules — so these are comparative magnitudes, not a computation of anyone's liability.