Illinois and Iowa have tax reciprocity for W-2 earnings. That means that Iowa residents such as your daughter are not subject to Illinois income tax on those earnings.
Your daughter does not need to file an Illinois tax return unless Illinois taxes were mistakenly withheld from her pay. If that happened, she should submit a non-resident Illinois tax return, on which she claims zero Illinois income, in order to receive a full refund.
Her income is of course fully taxable by her home state of Iowa, regardless of where it was earned.
Your daughter should submit Illinois Form W-5-NR to any Illinois employer in order to prevent Illinois taxes from being withheld. Here's a link to that form:
https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/withholding/documents/currentyear/il-w-5-n...
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
