Month-end close: payroll tax in Illinois

Illinois withholding is paid monthly or semi-weekly and returned quarterly on the IL-941, with no annual reconciliation return.

This is part of the payroll checklist. Do the federal steps first. Illinois withholding tax is filed with the Illinois Department of Revenue (IDOR), and state unemployment insurance with the Illinois Department of Employment Security (IDES).

Rate. State unemployment insurance has a taxable wage base of $14,250. Most employers newly liable on or after January 1, 2024 pay the standard entry rate of 3.350%, which includes a 0.550% Fund Building Rate. Administrative support and waste management employers pay 3.450%.

Filing. The IL-941 is filed electronically every quarter. Withholding payments are monthly for an employer that reported $12,000 or less in the look-back year (July 1, 2024 to June 30, 2025 for 2026), and semi-weekly above that.

Due. The IL-941 is due the last day of the month after the quarter. Monthly payments are due the 15th of the following month. Semi-weekly payments are due the Wednesday or Friday after the payday.

The trap. Illinois has no annual reconciliation return. An employer that withholds more than $12,000 in a quarter pays semi-weekly from the next quarter.

The month-end steps

1. Find the payment schedule. IDOR assigns it from the look-back period, the one-year period ending June 30 of the previous year, which for 2026 is July 1, 2024 to June 30, 2025. First-time taxpayers and employers that reported $12,000 or less pay monthly. Those that reported more than $12,000 pay semi-weekly. An employer that withholds more than $12,000 in a quarter starts paying semi-weekly in the next quarter [1]. Done when the schedule on file matches the notice from IDOR.

Semi-weekly payments must be made electronically. A due date on a weekend or state holiday moves to the next business day [1]. 2. File the IL-941 each quarter. It is filed electronically and is due by the last day of the month after the quarter ends. It must be filed even if no tax was withheld. Illinois has no annual reconciliation return [1]. Done when each quarter's IL-941 ties to the withholding paid for the quarter. 3. Check state unemployment insurance. The taxable wage base is $14,250. Most employers newly liable on or after January 1, 2024 pay the 3.350% entry rate, which includes a 0.550% Fund Building Rate for 2026. Employers in some industry sectors pay a higher entry rate, such as 3.450% for administrative support and waste management [2]. Contribution and wage reports are filed quarterly on the UI-3/40 through MyTax Illinois [3]. Done when the unemployment liability account equals taxable wages up to $14,250 per employee times the client's rate. 4. Tie the liabilities. Done when the withholding and unemployment accounts are at zero after the period's payments, or equal the amounts not yet due.