Locum Tenens Taxes in Illinois

Illinois is one of a handful of states that taxes individual income at a single flat rate rather than a graduated bracket system. Every dollar of Illinois taxable income, whether you earned $80,000 or $800,000, is taxed at the same percentage. Compare that to a progressive state like California, where a strong locum year can push your marginal state rate several points higher than a lean year, or to states with complex bracket structures that require careful income-timing to manage.

For Illinois-based locums, that flatness has a real planning benefit: your Illinois liability is close to a back-of-envelope calculation. There's no bracket-management strategy to run, no benefit to shifting income between years to stay under a threshold, and no surprise marginal-rate jump from a good year.

Here's the part that trips locums up: the flat rate only governs what Illinois charges on the income Illinois has a right to tax. It says nothing about Wisconsin's rate, Missouri's rate, or whether a given assignment state even wants a return from you. Multi-state planning for an Illinois-based locum isn't about the Illinois side, that part is nearly mechanical, it's about correctly sourcing income to each assignment state, filing the right nonresident returns, and claiming the credit Illinois allows for tax paid elsewhere so you're not taxed twice on the same income.

Illinois maintains reciprocal income tax agreements with four neighboring states: Iowa, Kentucky, Michigan, and Wisconsin. Under a reciprocity agreement, a resident of one state who works in the other doesn't have to file a nonresident return or pay income tax to the work-state on wages earned there; instead, all the wage income is taxed only by the home state.

That sounds like exactly what a traveling physician would want. It usually isn't, because of one critical detail most people miss.

In practice, this means an Illinois-resident locum working a 1099 assignment in Wisconsin doesn't get to skip a Wisconsin filing just because Illinois and Wisconsin have a reciprocity agreement on the books. You'll typically still need to file a Wisconsin nonresident return reporting the income earned there, and then claim the Illinois resident credit for the tax paid to Wisconsin, the same mechanism you'd use for a non-reciprocal state like Missouri or Ohio.

The one place reciprocity can still matter for a locum is if you also hold occasional W-2 income, for example, a part-time employed position or moonlighting arrangement in a reciprocal state, alongside your 1099 locum work. That W-2 slice could be exempt from the work-state's withholding under reciprocity, while your 1099 locum income from the same state is not. The two income types get treated differently even within the same tax year and the same state.

If Illinois is genuinely your tax home, you maintain a residence here, return between assignments, keep your driver's license and voter registration in-state, then Illinois taxes you as a resident on all of your income, no matter where in the country you earned it. That includes every 1099 dollar from every out-of-state assignment.

At the same time, the state where you physically performed the work generally has the right to tax the income you earned there, since most states tax nonresidents on income sourced to work performed within their borders. Without a mechanism to fix this, the same income would be taxed twice: once by Illinois as your resident state, once by the assignment state as the source state.

The reverse scenario is just as common: a locum physician whose tax home is in another state, say Texas or Florida, takes an assignment at an Illinois facility. In that case, Illinois is the nonresident, source state, and your actual home state is where you owe resident-level tax (or no income tax at all, if your home state doesn't have one).

Illinois generally requires a nonresident to file an Illinois return once Illinois-source income exceeds the state's filing threshold, which for a physician on a multi-week or multi-month locum contract is essentially always crossed. You'll report only the income attributable to the work you performed in Illinois; income from assignments in other states during the same year stays off the Illinois nonresident return.

Notice the asymmetry in the last row: a locum physician who has established a genuine tax home in a no-income-tax state (Texas, Florida, and similar) and takes an Illinois assignment pays Illinois nonresident tax on the Illinois-source income, with no offsetting credit needed, because there's no home-state tax to duplicate. That's part of why tax-home placement matters so much for locums who work multiple assignment states throughout the year; it's covered in depth in our Locum Tenens Tax Home Guide.

Illustrative example, not a specific client outcome. Dr. Alvarez is an emergency medicine physician who maintains her tax home in Springfield, Illinois. In 2026, she works a 14-week 1099 locum assignment in Wisconsin and a 10-week 1099 locum assignment in Missouri, returning to Illinois between and after both. Her total 1099 locum income for the year is $260,000: $130,000 earned in Wisconsin, $80,000 earned in Missouri, and $50,000 earned on shorter assignments within Illinois.

Notice that the Wisconsin reciprocity agreement never comes into play here, even though Wisconsin is on Illinois's reciprocity list, because Dr. Alvarez's income from that assignment is 1099 contractor pay, not W-2 wages. She files three returns (Wisconsin nonresident, Missouri nonresident, Illinois resident), and the Illinois resident credit on Schedule CR prevents the $210,000 of out-of-state income from being taxed in full by both Illinois and the assignment state. Her Illinois-source $50,000 is taxed by Illinois alone, with no credit needed since no other state has a competing claim on it.