IL · Payroll tax 2026
The true cost of hiring in Illinois
Estimate what a W-2 employee costs in Illinois and compare it with a 1099 contract using sourced 2026 payroll-tax defaults that you can adjust to your assigned rate.
Estimate a Illinois hire
Pre-filled with a 2.8% base new-employer rate. Adjust SUI, salary, benefits, and the 1099 rate to fit your hire.
Results update instantly. Your values stay in this browser.
A W-2 hire in Illinois costs more than salary. Employers pay federal FICA and FUTA plus state unemployment insurance. For 2026, HiringMath uses a 2.8% base new-employer rate on the first $14,250 of wages, producing up to about $399 of state UI tax per worker before experience-rating or account-specific adjustments. Illinois taxes wage income, which creates a withholding obligation but is not an employer-paid tax. Industry-specific rates can differ from the base new-employer rate. The calculator below combines those statutory items with editable benefits, workers' compensation, and overhead, then compares the result with a 1099 contract.
Illinois employer tax facts
| Item | IL |
|---|---|
| Base new-employer SUI rate | 2.8% |
| SUI taxable wage base | $14,250 |
| Federal FICA (employer) | 7.65% |
| FUTA | 0.6% |
| State income tax on wages | Yes |
| Worker classification test | ABC framework |
Extra employer taxes: Industry-specific rates can differ from the base new-employer rate.
Example: a $75,000 hire in Illinois
At a $75,000 base salary with typical benefits, a W-2 employee in Illinois costs an employer $99,479 per year — $24,479 above base pay. An equivalent 1099 contract at $75,000 would cost $24,479 less; the breakeven contract rate is $99,479.
Misclassification risk in Illinois
Test: ABC framework
ABC framework; construction work also has industry-specific classification rules.
Penalties by stateCompare nearby rates
Illinois's 2.8% new-employer SUI rate sits near New Jersey (2.8%), Alabama (2.7%), District of Columbia (2.7%), Florida (2.7%). See the full 51-state comparison or the 2026 employer payroll tax reference.
Common questions
Illinois hiring-cost FAQ
What SUI rate does HiringMath use for Illinois?
The calculator starts with a 2.8% base new-employer rate, applied to the first $14,250 of each employee's 2026 wages. Your assigned rate can differ because of industry, surcharges, and claims history, so replace the default with the rate on your state notice when available.
Does Illinois have a state income tax?
Yes. Illinois taxes wage income. Employers withhold it from employee pay, but it does not directly increase the employer's payroll-tax cost.
What should employers know about worker classification in Illinois?
ABC framework; construction work also has industry-specific classification rules. This is a planning summary, not legal advice; confirm classification decisions with the relevant agency or counsel.