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