Illinois Tax Residency Rules

Illinois State Tax Residency Overview

Whether an individual is a resident of Illinois for income tax purposes significantly affects their tax liability. An Illinois resident is generally subject to Illinois income tax on worldwide income, whereas a nonresident is taxed only on income derived from Illinois sources — wages earned in Illinois, income from Illinois businesses, and gains from Illinois real property.

Illinois imposes a flat individual income tax rate of 4.95% on net income, a rate established by the Illinois Income Tax Act and mandated to be uniform under Article IX, Section 3(a) of the Illinois Constitution. Unlike states such as New York or Massachusetts, Illinois does not impose a progressive surtax on high earners at the state level. However, Illinois also imposes a state estate tax with a $4 million exemption — and because that threshold is not indexed for inflation, it has grown increasingly significant for affluent Illinois residents over time.

Under 35 ILCS 5/1501(a)(20), an individual is an Illinois resident if they are either:

• Domiciled in Illinois and absent from the state only for a temporary or transitory purpose; or
• In Illinois for other than a temporary or transitory purpose during the taxable year, even if domiciled elsewhere.

Illinois's rules are implemented by 86 Ill. Admin. Code § 100.3020. Unlike New York, Connecticut, and many other states, Illinois has no "183-day" statutory residency test and no "permanent place of abode" rule. Instead, Illinois — like California — asks why you are in (or away from) the state, and relies on two rebuttable presumptions of residence, one of which is based directly on day counts.

Domicile Test

If your domicile is Illinois, you are an Illinois resident for income tax purposes unless you are outside Illinois for other than temporary or transitory purposes. Your domicile is your "true, fixed, permanent home and principal establishment" — the place you intend to return to after any absence, whether for work, travel, or any other reason. You can maintain multiple residences — a Chicago condominium, a lake house, a vacation home — but you can have only one domicile at any given time, and you keep it until you acquire a new one.

Your Illinois domicile does not change simply because you acquire property in another state, spend extended time elsewhere, or take steps that superficially suggest a new home base. It changes only when you physically move to a new location and form the genuine intent to make that new location your permanent home, abandoning any intent to return to Illinois. The Illinois Department of Revenue ("IDOR") evaluates all aspects of an individual's life — where they work, where their family lives, where they maintain social and business ties, where they keep their most important possessions — to determine whether a true change of domicile has occurred.

Factors Considered in Domicile Determinations

IDOR examines the totality of an individual's circumstances when auditing a claimed change of domicile. The regulation lists evidence that may be considered, including the location of spouse and dependents, voter registration, vehicle registration and driver's license, filing a resident income tax return in another state, home ownership or rental agreements, the permanent or temporary nature of work assignments, professional licenses, medical and professional advisors, club memberships, and telephone and utility usage over time. In practice, relevant factors include:

• Location of the primary residence and disposition of the former Illinois home (sold, rented, or retained);
• Where the individual is registered to vote and actually votes;
• State of issuance of driver's license and motor vehicle registrations;
• Location of bank accounts, particularly the primary checking account;
• Location of the individual's physicians, dentists, attorneys, accountants, and other professional advisors;
• Location of business activities and employment, and whether out-of-state work assignments are permanent or temporary;
• Where the individual's spouse, children, and other immediate family members reside;
• Location of social, fraternal, country club, and religious memberships;
• Location of the individual's most valued or sentimental personal property;
• Address used for mail, financial accounts, and insurance policies; and
• Time physically present in Illinois versus the new claimed domicile.

No single factor is determinative. Domicile is determined based on the weight of all evidence considered together. A person who claims Florida domicile but retains a Lincoln Park penthouse, sends children to a Chicago private school, belongs to a North Shore country club, and sees Chicago-based physicians will face a difficult audit regardless of where they are registered to vote. (One factor the regulation expressly excludes: the location of charities you donate to is not evidence of domicile or residence.)

The "Temporary or Transitory Purpose" Test

Even if you are domiciled elsewhere, you are an Illinois resident if you are in Illinois for other than a temporary or transitory purpose. The answer depends on the facts and circumstances of each case, but the regulation gives clear guidance:

• Temporary or transitory (not a resident): simply passing through Illinois on the way to another state; a brief rest or vacation; or being in Illinois to complete a particular transaction, contract, or engagement that requires presence for only a short period.
• Not temporary (resident): being in Illinois for business that will take a long or indefinite period; employment that may last permanently or indefinitely; recuperating from an illness that requires a long or indefinite stay; or retiring to Illinois with no definite intention of leaving.

Importantly, an individual who is in Illinois for other than a temporary or transitory purpose is a resident "even though he or she may also maintain an abode in some other state." Keeping a home elsewhere does not, by itself, make you a nonresident.

Presumptions of Residence

The regulation creates two rebuttable presumptions of residence. They are not conclusive, but they can be overcome only by clear and convincing evidence — a demanding standard. See 86 Ill. Admin. Code § 100.3020(f).

1. Homestead exemption. An individual receiving an Illinois homestead exemption on Illinois property is presumed to be an Illinois resident. Departing residents who keep a Chicago-area home should make sure the homestead exemption is removed — leaving it in place is direct evidence against a claimed move.
2. The day-count presumption. An individual who was an Illinois resident in one year is presumed to remain a resident the following year if they are present in Illinois more days than in any other state.

The second presumption is the one that most often catches people in the year after they leave Illinois. It is not a fixed 183-day threshold: a former resident who spends 120 days in Illinois, 110 days in Florida, and the rest of the year traveling among several other states has spent more days in Illinois than in any other state — and is presumed to still be an Illinois resident. To stay clear of the presumption, a departing resident needs to be able to show that they spent more days in their new home state (or in some other state) than in Illinois.

Why Day Counts Matter in Illinois

Because the day-count presumption compares Illinois against every other state, a former Illinois resident needs a record of where they were on each day of the year — not just a tally of Illinois days. Illinois's regulation does not define how a "day" is counted, so the conservative approach is to treat any presence in Illinois on a given day as an Illinois day and to keep records that show the full picture for each state.

Day counts also matter beyond the presumption. Time spent in Illinois versus a claimed new domicile is a core factor in any domicile audit, and a pattern of extended Illinois stays can suggest that a taxpayer is in Illinois for other than a temporary or transitory purpose. Days spent merely passing through Illinois — for example, connecting through O'Hare — are generally the kind of "passing through" presence the regulation treats as temporary, but the taxpayer must be able to document them. See our article on transit days and tax residency.

Illinois Estate Tax

Illinois imposes a separate state estate tax on the estates of Illinois residents. The exemption amount is $4 million per individual — a threshold that, unlike the federal estate tax exemption, is not indexed for inflation. As a result, the Illinois estate tax captures a growing share of Illinois estates over time as asset values rise.

Illinois estate tax rates are graduated and reach a top marginal rate of 16% on amounts above approximately $10 million. Illinois has no separate gift tax, so lifetime gifting is a common planning tool, although the Illinois computation is tied to the federal estate tax framework and prior taxable gifts can affect the calculation. Gifting strategies should be coordinated with an estate planning attorney.

For an Illinois resident with a taxable estate of $10 million, the Illinois estate tax — after applying the $4 million exemption — can approach $1 million, with a blended effective rate well below the 16% top rate due to the graduated schedule. For estates in the $20–$50 million range, the Illinois estate tax liability can reach several million dollars. By contrast, states such as Florida and Texas impose no state estate tax whatsoever. This differential has made Illinois estate tax planning — including changing domicile before death — a significant consideration for affluent Illinois residents and their advisors.

Proposals to raise the exemption have repeatedly stalled. HB2601, introduced in February 2025 by Rep. Adam Niemerg, would increase the exclusion to $8 million for deaths on or after January 1, 2026, but it has remained in the House Rules Committee since March 2025. Similar Senate bills introduced in February 2026 (SB3787 and SB3789) have not advanced. As of November 2026, the $4 million exemption remains in effect. Importantly, unlike federal law, Illinois provides no portability of the estate tax exemption between spouses — each spouse's exemption must be used or lost at death, making estate planning for married Illinois residents more complex than under federal rules.

The Illinois estate tax on a decedent's worldwide estate applies based on domicile at the time of death, not on time spent in the state. A successful change of domicile from Illinois can therefore eliminate most Illinois estate tax exposure, while an unsuccessful change — one that IDOR challenges and wins — means the full Illinois estate tax applies. Note that Illinois can still tax a nonresident's estate on Illinois real estate and tangible personal property located in Illinois, so retaining a Chicago condominium after moving keeps that property within reach of the Illinois estate tax. See 35 ILCS 405/1 et seq.

2026 Update: The "Millionaire Tax" Proposal

In 2026, Illinois lawmakers considered a constitutional amendment to impose an additional 3% income tax surcharge on income above $1 million, with revenue directed to property tax relief and education. Because the Illinois Constitution requires a flat income tax, the surcharge would require voter approval of a constitutional amendment. The proposal failed to gain enough support in the Illinois House before the May 2026 deadline to reach the statewide ballot, so the earliest it could go before voters is November 2028. A non-binding advisory question on the same idea appeared on the November 2026 ballot in Cook County.

While the surcharge is not law, the continuing push for it is a reason high earners considering a move out of Illinois increasingly plan their departure — and their documentation — well in advance.

Burden of Proof and Record Keeping

The burden of proof in an Illinois residency audit falls on the taxpayer, and where a presumption of residence applies, it must be overcome by clear and convincing evidence. A former Illinois resident who claims to have moved must be prepared to substantiate both the change of domicile and, for the following year, that they were not present in Illinois more days than in any other state.

The regulation also directs individuals who are presumed residents but believe they are nonresidents to file a return and attach a signed statement explaining their position, together with supporting evidence.

IDOR auditors are methodical. In practice, auditors request or subpoena:

• Cell phone carrier records showing towers and locations throughout the year;
• Credit card and bank statements showing point-of-purchase locations;
• I-PASS, Illinois Tollway, and other electronic toll records;
• Airline frequent flyer statements and boarding passes;
• Medical and dental appointment records;
• Club, gym, and country club check-in records; and
• Social media posts, photos, and location check-ins.

Contemporaneous records — kept day by day as events occur — carry substantially more weight than reconstructed calendars prepared after an audit begins. Tax tribunals have repeatedly found reconstructed records, unsworn statements, and calendars with unexplained gaps insufficient to meet the taxpayer's burden.

Use the Domicile365 App to maintain a GPS-based, day-by-day record of your location across every state you visit — the kind of contemporaneous, objective documentation needed to show where you spent the most days and to support a change of domicile in an IDOR examination.

Part-Year Residents

An individual who moves into or out of Illinois during the taxable year is generally treated as a part-year resident. A part-year resident is taxed as an Illinois resident for the portion of the year during which they were an Illinois resident, and as a nonresident for the remainder. Illinois uses a proration method to allocate income between the resident and nonresident periods, reported on Schedule NR of the Illinois Form IL-1040. Individuals changing their Illinois domicile mid-year must document the precise date of the change, as that date determines which income is subject to Illinois worldwide taxation and, critically, whether the estate may be subject to the Illinois estate tax in the event of death.

Conclusion

Illinois's combination of a 4.95% flat income tax, a state estate tax with a $4 million non-inflation-adjusted exemption, a day-count presumption that follows former residents into the year after they leave, and an active IDOR audit program makes residency status a consequential tax planning decision for high-income and high-net-worth individuals with Illinois ties. The domicile rules are strict, the presumptions can be overcome only by clear and convincing evidence, and IDOR has proven willing to challenge claimed changes of domicile — particularly among departing Chicago-area residents with ongoing ties to the state.

Download the Domicile365 App to maintain a defensible, GPS-based record of your daily location. Sign up for a free 60-day trial. The Domicile365 App is available for Apple iOS and macOS, Google Android, and Windows.