Live in Delaware, Work in Illinois: Which State Taxes Your Paycheck?
Answer
Illinois withholds and Delaware credits. Without an agreement between them, both states are entitled to tax income earned in Illinois by a Delaware resident. The mechanism that stops you paying twice is the credit on the Delaware resident return, which is why the Illinois return has to be completed first.
Last verified
Without an agreement between Delaware and Illinois, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Illinois figure is an input to the Delaware return, so completing Delaware first means doing it twice.
A Delaware resident taxed by another state on the same income claims the credit for taxes paid to other states on Schedule I (Form PIT-RES). The credit is capped at the Delaware tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · IllinoisForm IL-1040 with Schedule NR
File the Illinois nonresident return FIRST — you need the Illinois tax figure before you can complete Delaware.
- 2Resident return · DelawareSchedule I (Form PIT-RES)
File a Delaware resident return reporting all income, then claim the credit for tax paid to Illinois. The credit is capped at what Delaware would have charged on that same income, so if Illinois taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Delaware | Illinois | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | None | 4 (Form IL-W-5-NR) |
| Convenience rule | Yes — general rule | No |
| Nonresident return | Form PIT-NON | Form IL-1040 with Schedule NR |
| Credit for other-state tax | Schedule I (Form PIT-RES) | Schedule CR |
| Nonresident safe harbour | None published | 30 days |
| Local income tax | Yes | No |
| Revenue department | Delaware Division of Revenue | Illinois Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Illinois and working in Delaware gives:Both states — credit offsets the double tax.
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.
- Remote worker: Delaware → IllinoisHome state only
- 1099 contractor: Delaware → IllinoisHome state, plus the client state if you work there
- Moved mid-year: Delaware → IllinoisTwo part-year returns
Other Delaware pairs
Questions people actually ask
I live in Delaware and work in Illinois. Which state takes the tax out of my paycheck?
Illinois withholds and Delaware credits. Without an agreement between them, both states are entitled to tax income earned in Illinois by a Delaware resident. The mechanism that stops you paying twice is the credit on the Delaware resident return, which is why the Illinois return has to be completed first.
Which state should my employer be withholding for?
Illinois. The wages are sourced to Illinois, so Illinois withholding is correct and there is no Delaware withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Delaware gives residents a credit for tax paid to Illinois on the same income, claimed on Schedule I (Form PIT-RES). The credit is capped at the Delaware tax on that income, so if Illinois taxes it more heavily the excess is not refunded by either state.
How current is this?
The Delaware and Illinois rules on this page were last checked against Delaware Division of Revenue and Illinois 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.
- Delaware Division of Revenue — individual income taxaccessed 2026-08-07
- Illinois Department of Revenue — individual income taxaccessed 2026-08-07