.png)
Illinois combines a flat 4.95% income tax with a mandatory Secure Choice retirement program and some of the US’s most complex workers’ comp requirements. Chicago adds its own layered local obligations. Rippling handles all of it.
Illinois is the fifth-largest state economy in the US, with Chicago as one of the country’s major financial, professional services, and technology hubs. Illinois payroll is characterized by a flat 4.95% state income tax (no brackets), the Secure Choice mandatory retirement program for employers without a qualifying plan, and a complex workers’ compensation environment. Chicago-based employees face additional local minimum wage, paid leave, and benefits requirements that layer on top of state law.
Illinois SUTA is administered by IDES. The Paid Leave for All Workers Act (effective January 1, 2024) gives all Illinois employees up to 40 hours of paid leave per year with no restrictions on use — one of the broadest paid leave laws in the US.
Rippling’s Illinois payroll module provides:
| Contribution | Rate | Notes |
|---|---|---|
| FUTA | 6.0% (net 0.6%) | After SUTA credit; first $7,000 wages |
| Illinois SUTA (IDES) | New employer 3.175% | On first $13,271 of wages (2024) |
| Social Security | 6.2% | Up to $168,600 wage base (2024) |
| Medicare | 1.45% | No wage base limit |
| Workers’ Compensation | Varies by risk class | Mandatory; one of the higher-cost states |
.svg)
| Contribution | Rate | Notes |
|---|---|---|
| Federal Income Tax (FITW) | Graduated 10–37% | Per W-4 |
| Social Security | 6.2% | Up to $168,600 wage base (2024) |
| Medicare | 1.45% + 0.9% surtax | Surtax above $200K single/$250K joint |
| Illinois State Income Tax | 4.95% flat | No brackets — flat rate for all income levels |
| Illinois Income | IL Rate |
|---|---|
| All income | 4.95% flat |
Illinois has a constitutional flat income tax — no graduated brackets. Standard exemption: $2,425/taxpayer + $2,425/dependent. Withholding remitted to IDOR on IL-941 schedule (monthly or quarterly based on volume). Annual reconciliation via IL-W-3.
Final Pay: Illinois requires final pay on the next regularly scheduled payday. No requirement for immediate payment on involuntary termination (unlike California). Accrued vacation must be paid out if the employer’s policy or practice treats it as earned wages — Illinois courts generally hold that accrued PTO is a wage.
WARN Act: Illinois WARN Act applies to employers with 75+ employees — 60 days’ notice required for plant closings or mass layoffs. More expansive than the federal WARN Act.
Illinois Secure Choice is a state-mandated retirement savings program. Employers with 5+ employees that have been in business for 2+ years and do not offer a qualifying retirement plan (401(k), SIMPLE IRA, SEP IRA, etc.) must register and auto-enroll employees at a default 5% contribution rate. Employees can opt out or adjust their rate. Rippling automatically checks Secure Choice eligibility and manages enrollment for qualifying Illinois employers.
Illinois has a flat state income tax rate of 4.95% on all income — no graduated brackets. This makes Illinois state withholding calculation straightforward compared to states with progressive rates. Withholding is remitted to IDOR monthly or quarterly depending on withholding volume. Rippling handles IL state withholding automatically.
Illinois has one of the more complex workers’ compensation environments in the US, with employer-only funding and higher average claim costs than most states. Illinois requires employers to carry workers’ comp insurance from the first day of employment — there is no minimum employee count exemption. Failure to carry coverage is a Class A misdemeanor. Rates vary by occupation risk class.
Chicago has its own minimum wage ($16.20/hour July 2024), the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance (effective July 2024 — 40 hours paid leave + 40 hours paid sick leave), and additional employment regulations. Rippling tracks Chicago local requirements for employees with a Chicago work location.
