Illinois Updates 2023 Withholding Allowance Formula

July 27, 2023

Illinois updated its withholding formula lowering the state allowance from its 2023 level of $2,625 to $2,425.

At A Glance

  • Public Act 103-0009 maintained the 2022 Individual Income Tax personal exemption allowance at $2,425 for 2023, effective June 7, 2023.
  • The agency has updated Booklet IL-700-T. The new formulas for employees who claim allowances should be reviewed and applied.
  • A formula to calculate “catch-up” withholding has been added as an addendum to the IL-700-T guide, with an allowance value of $2,225.

What Is the New Illinois State Allowance for 2023 Withholding?

On July 5, 2023, Illinois updated its withholding formula, lowering the state allowance from its 2023 level of $2,625 to $2,425.

To correct the withholding for existing employees for the remainder of 2023, a “catch-up” formula was also issued with a value of $2,225.

Provisions for the allowance value in Public Act 103-0009 took effect upon the bill’s signing. The bill will continue to provide adjustments each year for the allowance value.

For more information on Illinois' wage and payroll tax laws, check out our Illinois Wage and Payroll Tax Facts page.


Next Steps

  • Paylocity has updated the allowance value to $2,225 for the remainder of 2023 to ensure workers in IL have sufficient withholding for the remainder of the year.
  • Employees new to Illinois who are concerned about their withholding amounts may submit an updated IL W-4 form.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.


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