Illinois W-2 Explained, Box by Box

The boxes, in order

Boxes 18 to 20 being empty is the first Illinois-specific thing to notice. Illinois has no municipal income tax anywhere in the state, Chicago included, so there is never anything to report there. If you see something in Box 19 on an Illinois W-2, it belongs to work performed in another state.

Why Box 1, Box 3 and Box 5 disagree

These three should be different, and how they differ tells you exactly which deductions you had. Box 1 is wages after pre-tax deductions that escape income tax; Box 3 and Box 5 are wages after pre-tax deductions that escape FICA. Those sets are not the same:

So if Box 1 is lower than Box 3, the gap is almost always your traditional retirement deferrals — and it is the clearest possible demonstration of a rule that surprises people every year: a 401(k) contribution never reduces Social Security or Medicare tax. Put the same figures into the Illinois paycheck calculator and you will see the same asymmetry check by check.

Box 1 can also be higher than Box 3, and there the usual cause is simply the wage base. Social Security wages stop at $184,500 for 2026 and $176,100 for 2025, while Box 1 keeps going. Non-qualified deferred compensation distributions do it too — they appear in Box 11, are income-taxable when paid, and had FICA charged back when they were deferred.

Box 16, and what Illinois does with it

For most Illinois employees Box 16 equals Box 1. Form IL-1040 begins at federal adjusted gross income and Illinois does not decouple from the federal treatment of 401(k) deferrals or Section 125 premiums, so the state and federal wage figures line up. Four situations break that:

• A non-resident with some Illinois working days. Illinois sources compensation by the ratio of Illinois working days to total working days, once the 30-day threshold is passed.
• A part-year resident, whose Illinois wages cover only the resident portion plus Illinois-source income from the rest.
• A reciprocal state resident — Iowa, Kentucky, Michigan or Wisconsin — who filed Form IL-W-5-NR, in which case Illinois wages should be nil.
• Wages split across states, where the totals in Box 16 across several state lines exceed Box 1 because each state reports what it claims.

That last one alarms people who add up the state lines and find more than their federal wages. It is normal. States do not divide a pie; each reports its own claim, and the credit for tax paid to other states is what prevents actual double taxation. The rules are set out on moving to or from Illinois and Illinois remote work taxes.

Box 12 codes in full

The three at the bottom are new. Codes TP and TT first appear on 2026 forms, reporting cash tips and qualified overtime compensation so that the federal tips and overtime deductions can be substantiated, with Box 14b carrying the Treasury Tipped Occupation Code. They were not on 2025 forms — the IRS left those unchanged and granted penalty relief, telling employers to supply the figures through Box 14 or a separate statement and telling individuals to compute the 2025 deductions from Box 7, Form 4137 or their own pay records.

Two codes are worth understanding rather than merely reading. DD is the full cost of your employer-sponsored health coverage, employer and employee share together — informational only, not taxable, not entered anywhere on your return, and usually a much larger number than people expect. W combines your own cafeteria-plan HSA contributions with your employer's, which matters because it is the figure that has to reconcile on Form 8889.

Deadlines and corrections

Employers must furnish W-2s to employees and file them with the Social Security Administration by 31 January, moving to the next business day where that falls at a weekend. Illinois adds its own requirement: W-2s must be filed with the Department of Revenue electronically by 31 January, through MyTax Illinois or the W-2 Electronic Transmission Program, with a $5 per form penalty for paper filing without a waiver. Household employers reporting on their IL-1040 are excepted.

If a form is wrong, the sequence is: ask the employer for a Form W-2c; if it is unresolved by the end of February, contact the IRS, which will contact the employer; and if the filing deadline arrives anyway, file with Form 4852 using your best estimate from pay stubs. That is the practical reason to keep the final stub of every year — it is your only independent record, and the pay stub guide covers what your employer must give you.

Checking your own W-2

Four quick tests catch most errors:

• Box 4 should be 6.2% of Box 3, to the cent. If it is not, something is wrong.
• Box 6 should be at least 1.45% of Box 5 — more if you crossed $200,000 and the 0.9% Additional Medicare Tax applied.
• Box 3 should never exceed the wage base for the year. Two employers can each report up to it, and the excess Social Security tax is recovered on your federal return.
• Box 1 minus Box 12 codes D, E, G and S should be close to Box 3, once Section 125 premiums and the wage base are accounted for.

If Box 2 looks too small against Box 1, the withholding checkup will show whether you are heading for a bill, and the refund calculator compares your Illinois liability against Box 17. Both are more useful in November than in April.

Illinois calculators