Illinois recently enacted legislation that changes the rules for
withholding income tax from non-resident employees. The new rules
replace the current, somewhat more complicated rules with a more
straight-forward method that is based on, among other things, the
number of working days that an employee spends in Illinois.
Current Withholding Rules
Currently, every employer maintaining an office or transacting
business in Illinois that is required to withhold federal tax from
compensation paid to a non-resident employee in Illinois is also
required to withhold Illinois income tax from such payment.
Compensation is considered paid to an employee in Illinois if:
- the employee’s services for the
employer are performed entirely within Illinois;
