The Tax Brief real effective rates for 111+ countries — bi-weekly, free.
TAX GUIDE

No Tax on Overtime: Illinois 2026 — Federal Deduction + 4.95% State Rate

Daniel · CountryTaxCalc Updated June 2026
Run the calculator → Jump to FAQ
At a glance

Key Facts

Federal OT deduction (OBBBA)
Up to $12,500 single / $25,000 MFJ
Illinois income tax rate
4.95% flat on all income
Illinois personal exemption
$2,425 per taxpayer (2026)
Illinois conformity to OBBBA
None — overtime fully taxable at state level
FICA on overtime
7.65% — unchanged
Introduction
Illinois imposes a flat 4.95% income tax on all income — including overtime pay. While the federal OBBBA overtime deduction can reduce your federal income tax on up to $12,500 (single) of qualifying overtime, Illinois has not conformed to this deduction and taxes your overtime in full. This guide explains exactly what Illinois workers keep after both federal and state taxes on overtime earnings in 2026.
Section 01

Illinois Tax on Overtime: What You Owe

Illinois has a constitutionally mandated flat income tax — Article IX, Section 3 of the Illinois Constitution requires a uniform rate on all net income. This makes it legally impossible for Illinois to create a different rate or exemption specifically for overtime income without a constitutional amendment. As of 2026, Illinois taxes overtime at the same 4.95% rate as all other income. On $10,000 in overtime pay, Illinois income tax is $495. Illinois has not passed any conforming legislation for the OBBBA overtime deduction.
Section 02

The Federal Deduction Still Applies

Even though Illinois does not conform, you still benefit from the federal OBBBA deduction. For a single Illinois worker earning $12,500 in qualifying overtime within a total AGI below $150,000, the full $12,500 is deductible from federal income. At a 22% federal marginal rate, that saves $2,750 in federal income tax. You still pay Illinois 4.95% on the same $12,500 ($618.75) and FICA 7.65% ($956.25). Net saving from OBBBA on this amount: $2,750 federal saved minus $0 state savings = $2,750 in total tax reduction compared to pre-OBBBA law.
Section 03

Chicago and Other Illinois Cities

Illinois does not have a local income tax in the traditional sense — Chicago and other Illinois cities do not impose a separate wage income tax. However, Chicago does have specific payroll-related fees and Chicago's higher cost of living means workers often earn higher OT wages than the state average, increasing both the overtime amount and the benefit of the federal deduction. Illinois workers in Cook County (Chicago area) may also face higher property taxes and sales taxes that affect total household tax burden.
Section 04

Worked Example: Illinois Nurse on OT

An Illinois nurse earning $40/hour works 50 hours per week for 26 weeks during a staffing shortage. Regular pay: $40 × 40 × 26 = $41,600. Overtime pay: $60 × 10 × 26 = $15,600. Total wages: $57,200. OBBBA OT deduction (capped at $12,500). Federal taxable income: $57,200 − $14,600 standard − $12,500 = $30,100. Federal income tax: ~$3,452. Illinois taxable income: $57,200 − $2,425 exemption = $54,775. Illinois income tax: ~$2,711. FICA: $4,376. Total tax: ~$10,539. Without OBBBA: federal income tax ~$6,202. OBBBA saves $2,750 for this worker.
Section 05

Illinois Overtime Law vs FLSA

Illinois overtime law generally mirrors the FLSA — time-and-a-half for hours over 40 per week. Illinois also has the One Day Rest in Seven Act requiring employees to have at least 24 hours of rest per week. Unlike California, Illinois does not have daily overtime (1.5× after 8 hours per day). Only the weekly 40-hour threshold applies. Qualifying Illinois overtime for the OBBBA deduction means FLSA overtime — hours above 40 per workweek for non-exempt employees, paid at 1.5× the regular rate.
💡

CountryTaxCalc.com is reader-supported. When you use our partner links, we may earn a commission at no cost to you. This helps us provide free tax calculators and comparison tools. Learn more about our affiliate partnerships

Talk to a Real CPA

Taxhub

★ 4.8 verified reviews  ·  3,758 reviews

Moving between states means a complex multi-state tax return. Taxhub matches you with a real CPA via video call — average cost $325. Rated 4.8★ by 3,700+ clients.

⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.

Get Matched With a CPA →

Interested in reaching this audience? Advertise on CountryTaxCalc →

FAQ

Frequently Asked Questions

Can Illinois pass a state-level No Tax on Overtime law?

Unlike most states, Illinois faces a constitutional constraint — the flat tax requirement in Article IX means it cannot create a lower rate or exemption for a specific income category without a constitutional amendment. A constitutional amendment requires approval by 60% of each legislative chamber AND either majority approval in a voter referendum or 3/5 approval by voters on the specific amendment. This makes Illinois exemption of overtime income highly unlikely in the near term.

Do Illinois public employees (state workers, teachers) get the OBBBA deduction?

The OBBBA overtime deduction applies to FLSA-covered overtime. Many state and local government employees ARE covered by the FLSA, so if they earn overtime at 1.5×, it qualifies. However, teachers classified as exempt under the FLSA "learned professional" exemption would not have qualifying overtime. Check your employment classification.

Does the OBBBA deduction affect Illinois estimated tax payments?

The federal OBBBA deduction reduces federal estimated tax liability. You should reduce your federal quarterly payments to reflect the expected deduction. Your Illinois estimated tax payments remain based on the full overtime income — the deduction does not reduce Illinois liability.

What is the Illinois exemption amount for 2026?

The Illinois personal exemption is $2,425 per taxpayer (2025 figure — verify for 2026 at the Illinois Department of Revenue website). This is the only deduction available for most Illinois workers; Illinois does not allow the standard federal deduction or most federal itemized deductions.
Disclaimer:This guide is for educational purposes only and does not constitute tax, legal, or financial advice. Illinois tax law and OBBBA regulations are subject to change. Consult a licensed CPA or tax professional for advice specific to your situation.
Keep reading

Related Guides

GUIDE
No Tax on Overtime: Georgia 2026
GUIDE
OBBBA Phase-Out Guide
GUIDE
US Income Tax Calculator
GUIDE
California Daily Overtime Rules
From the brief
CY0%dividends, 60-day rule
PT20%flat rate, tech workers
GB39%non-dom regime gone
The Tax Brief · Subscribe free

More like this, every two weeks.

Verified rates, real after-tax figures, plain English. Free.

Bi-weekly. No spam. Unsubscribe in one click.