Illinois ~ Corporate, Personal Income Taxes: Withholding Tax Rate, Personal Exemption Changes Summarized

The Illinois Department of Revenue has issued an information bulletin on withholding tax rate and personal exemption changes enacted as part of the 2017 budget package (TAXDAY, 2017/07/10, S.9). The Illinois income tax rate for individuals has increased from 3.75% to 4.95%, effective July 1, 2017. The bulletin advises employers, payroll service providers, software developers, and payers of gambling and lottery winnings who withhold Illinois income taxes to immediately adjust withholding tax rates. The department has updated the Illinois withholding tax tables provided in Booklet IL-700-T for taxpayers computing new withholding tax rates. The bulletin provides a formula for calculating withholding by taxpayers who use an automated payroll method. The budget legislation also eliminates the Illinois personal exemption for taxpayers who have adjusted gross income for the taxable year exceeding $500,000 for returns with a federal filing status of married filing jointly, or $250,000 for all other returns. Employees who exceed these income amounts may complete a new Illinois withholding allowance certificate, Form IL-W-4, to update their exemption amounts and increase their Illinois withholding.

Subscribers can view the booklet.


Informational Bulletin FY 2018-03, Illinois Department of Revenue, July 2017, ¶403-247



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