Yes, Illinois (IL) will still tax your income because your resident state wants the tax dollars for all worldwide income during your residency. The good new is they will give you a credit for taxes paid to another state on the same income. Below is an explanation of how it works.
The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income.
The credit for tax paid to another state on the same income will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state (this means you could pay a higher amount if the New York (NY) state tax is higher than IL.
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