Live in Texas, Work in Illinois: Which State Taxes Your Paycheck?
Answer
The work state takes it. Illinois taxes nonresidents on income earned within the state and expects a nonresident return; Texas has no wage income tax, so nothing is due there. This is the common pattern for people who live in a no-tax state and commute across the line.
Last verified
This is the mirror image of the more common commute. There is no home-state return to file, so the Illinois nonresident return carries the whole obligation — and because Texas charges nothing, there is no credit mechanism involved anywhere.
What you file
- 1Nonresident return · IllinoisForm IL-1040 with Schedule NR
File a Illinois nonresident return for the wages you earned in Illinois. Texas has no wage income tax, so there is no second return and no credit to claim.
The two states, side by side
| Texas | 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 | Texas Comptroller of Public Accounts | Illinois Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Illinois and working in Texas 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: Texas → IllinoisNo state income tax on your wages
- 1099 contractor: Texas → IllinoisClient state only, if you work there
- Moved mid-year: Texas → IllinoisOne part-year return — the state you moved to
Other Texas pairs
Questions people actually ask
I live in Texas and work in Illinois. Which state takes the tax out of my paycheck?
The work state takes it. Illinois taxes nonresidents on income earned within the state and expects a nonresident return; Texas has no wage income tax, so nothing is due there. This is the common pattern for people who live in a no-tax state and commute across the line.
Which state should my employer be withholding for?
Illinois. The wages are sourced to Illinois, so Illinois withholding is correct and there is no Texas withholding to set up, because Texas levies no income tax on wages.
How current is this?
The Texas and Illinois rules on this page were last checked against Texas Comptroller of Public Accounts 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.
- Texas Comptroller of Public Accounts — individual income taxaccessed 2026-08-07
- Illinois Department of Revenue — individual income taxaccessed 2026-08-07