Updated January 12, 2021
With over 300,000 small businesses in Illinois, you’re not the first one trying to figure out payroll taxes. If sifting through timesheets, calculating withholdings, and sorting out deductions seem to take longer than the Cubs took to win their last World Series, today is your lucky day. Our Illinois payroll calculator is designed to help any employer in the Land of Lincoln save time and get payroll done right.
All you have to do is enter wage and W-4 information for each employee, and our calculator will process your gross pay, net pay, and deductions for federal taxes as well as Illinois state taxes.
If you have any questions about how to use our Illinois payroll calculator, you can always find definitions and more detailed information in our guide to the payroll process. And keep in mind that we offer easy and affordable online payroll services if you ever want any outside help.
First of all, let’s calculate federal payroll taxes for your employees. You can use our Illinois payroll calculator to calculate all your employees’ federal withholdings, plus any additional taxes your business is responsible for paying.
Here’s a summary of all you need to know when you’re calculating payroll taxes for your hardworking Illinoisans! For a more detailed explanation of all of the steps below, check out our step-by-step guide.
Now that we’re done with federal taxes, let’s look at Illinois state income taxes. You’ll also need to withhold state taxes before you’ll be ready to send your employees home with their paychecks.
The first step to calculating payroll in Illinois is applying the state tax rate to each employee’s earnings. According to the Illinois Department of Revenue, all incomes are created equal: Employers are responsible for deducting a flat income tax rate of 4.95% for all employees. No cities within Illinois charge any additional municipal income taxes, so it’s pretty simple to calculate this part of your employees’ withholding.
You’ll also need to consider each employee’s exemptions, which is $2,000 per year. Additional exemptions are allowed if the employee is over 65 years old and/or legally blind.
Taxes paid to the state of Illinois must be paid on an ongoing basis using these forms:
Unemployment Insurance (UI) supplies funding for the Illinois Department of Employment Security (IDES), which pays benefits to the unemployed. The wage base is $12,960 for 2021, and rates range from 0.525% to 6.925%. If you’re a new employer, your rate is 3.175%.
Newly registered businesses must register with IDES within 30 days of starting up. You can register electronically through the MyTax Illinois website.
You’re the boss of your business, and now you’re the boss of payroll! Once you’ve calculated each employee’s net pay by implementing deductions and withholdings, you’re good to cut those checks.
In addition to making sure your employees don’t have to wait any longer for their paychecks, make sure you set aside the amount of money your company needs to pay. FICA and UI payments can add up quickly, but if you fulfill them on time, you’ll be golden.
Here are some more helpful resources so you can become the payroll whiz your small business needs you to be!
If calculating payroll taxes ever starts to feel like a burden, you might want to review our list of signs it’s time to outsource your payroll.