Live in Illinois, Work Remotely for a Montana Employer: Who Taxes You?
Answer
Illinois taxes the income and Montana cannot. Residency, not the location of the job, drives this answer: Illinois reaches all of a resident's income, and Montana has no personal income tax to apply to the part earned inside its borders.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. Montana takes nothing, but Illinois still taxes residents on income earned anywhere, so the full amount lands on your Illinois return.
What you file
- 1Resident return · Illinois
File a Illinois resident return reporting all of your income.
The two states, side by side
| Illinois | Montana | |
|---|---|---|
| Taxes wages | Yes — flat | Yes — graduated |
| Reciprocity partners | 4 (Form IL-W-5-NR) | 1 (Form MW-4) |
| Convenience rule | No | No |
| Nonresident return | Form IL-1040 with Schedule NR | Form 2 with the nonresident/part-year schedule |
| Credit for other-state tax | Schedule CR | Form 2 (credit for income tax paid to another state) |
| Nonresident safe harbour | 30 days | None published |
| Local income tax | No | No |
| Revenue department | Illinois Department of Revenue | Montana Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Montana and working in Illinois gives:Home state only.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Illinois → MontanaBoth states — credit offsets the double tax
- 1099 contractor: Illinois → MontanaHome state, plus the client state if you work there
- Moved mid-year: Illinois → MontanaTwo part-year returns
Other Illinois pairs
Questions people actually ask
I live in Illinois and work remotely for a Montana employer. Which state do I pay?
Illinois taxes the income and Montana cannot. Residency, not the location of the job, drives this answer: Illinois reaches all of a resident's income, and Montana has no personal income tax to apply to the part earned inside its borders.
Which state should my employer be withholding for?
Illinois. Your employer should withhold Illinois tax rather than Montana tax on these wages. If a Montana line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Montana employer's location alone create a Montana tax obligation?
No. Montana sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Montana are a different matter — those are Montana-source income and can require a nonresident return.
How current is this?
The Illinois and Montana rules on this page were last checked against Illinois Department of Revenue and Montana Department of Revenue on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Illinois Department of Revenue — individual income taxaccessed 2026-08-07
- Montana Department of Revenue — individual income taxaccessed 2026-08-07