Live in Tennessee, Work in Illinois: Which State Taxes Your Paycheck?
Answer
Illinois is the only state with a claim. Living in Tennessee spares you a resident return, but it does not shelter income earned inside Illinois — that income is Illinois-source and it is taxed there on a nonresident return.
Last verified
Living in a state with no income tax removes the resident return, but it does not shelter income you earn somewhere else. Illinois taxes what is earned inside Illinois, whoever earns it, and a nonresident return is how that gets settled.
What you file
- 1Nonresident return · IllinoisForm IL-1040 with Schedule NR
File a Illinois nonresident return for the wages you earned in Illinois. Tennessee has no wage income tax, so there is no second return and no credit to claim.
The two states, side by side
| Tennessee | Illinois | |
|---|---|---|
| Taxes wages | No | Yes — flat |
| Reciprocity partners | None | 4 (Form IL-W-5-NR) |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form IL-1040 with Schedule NR |
| Credit for other-state tax | No income tax | Schedule CR |
| Nonresident safe harbour | Not applicable | 30 days |
| Local income tax | No | No |
| Revenue department | Tennessee Department 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 Tennessee 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.
- Remote worker: Tennessee → IllinoisNo state income tax on your wages
- 1099 contractor: Tennessee → IllinoisClient state only, if you work there
- Moved mid-year: Tennessee → IllinoisOne part-year return — the state you moved to
Other Tennessee pairs
Questions people actually ask
I live in Tennessee and work in Illinois. Which state takes the tax out of my paycheck?
Illinois is the only state with a claim. Living in Tennessee spares you a resident return, but it does not shelter income earned inside Illinois — that income is Illinois-source and it is taxed there on a nonresident return.
Which state should my employer be withholding for?
Illinois. The wages are sourced to Illinois, so Illinois withholding is correct and there is no Tennessee withholding to set up, because Tennessee levies no income tax on wages.
How current is this?
The Tennessee and Illinois rules on this page were last checked against Tennessee Department 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.
- Tennessee Department of Revenue — individual income taxaccessed 2026-08-07
- Illinois Department of Revenue — individual income taxaccessed 2026-08-07