E1: 07: Legislative Requirement for New ALT Calculation Code 29 for Decreased Personal Exemption Illinois State Income Tax (Doc ID 2968899.1)

Last updated on AUGUST 20, 2023

Applies to:

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Per Vertex 4.4.9 July Monthly Update for Illinois State Tax Changes

Decreased the Line 1 personal exemption amount from $2,625.00 to $2,225.00, effective 1-1-23.

Note: Illinois reduced the 2023 Individual Income Tax personal exemption allowance to $2,425.00 for 2023. For employees that were on payroll from January to June, the amount of the income tax withheld for the remainder of the 2023 tax year may need to be adjusted. For some employees, the recalculated amount will result in no net change; however, for some it will result in a larger amount of tax withheld from each pay period remaining in 2023. Illinois provided another reduced allowance amount that will serve as a means to catch up the employees' withholding. The amount for those employees is $2,225.00. The default primary exemption amount of $2,225.00 will be supported for the remainder of 2023.

Employees starting or earning wages for the first time on or after 6-7-23 are to use the $2,425.00 standard personal exemption allowance amount in withholding calculations. An alternate calculation code of 29 (Illinois Standard Allowance Amount) was created to support the use of the $2,425.00 allowance amount.

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