Illinois to Texas: When Your Company Moves and You Follow

On June 14, 2022, Caterpillar announced it would move its global headquarters from Deerfield, Illinois to Irving, Texas. Local coverage put the headquarters staff at about 240 people and noted that the move did not take Caterpillar out of Illinois: the state remained home to its largest concentration of employees anywhere, about 17,400 people across East Peoria, Mapleton, Mossville, Pontiac and Decatur.

That combination is the shape of this corridor for employees. The company goes to Texas. A great deal of the company stays in Illinois. And the people who follow the job are not planning a tax move at all. They are planning a school transfer, a house sale and a relocation package, with a start date someone else picked.

Most writing about moving from Illinois to Texas is written for retirees and business owners, and it focuses on the house and the sale of a company. This article is about the transferee. Our Illinois residency guide rates Illinois 3 out of 5 on exit stickiness and 3 out of 5 on audit aggressiveness. Our Texas residency guide rates Texas 1 and 1, because Texas has no individual income tax and no reason to audit anyone for arriving. All of the exposure on this corridor sits on the Illinois side, and for an employee it runs through three places: where the family is during the transition, where you actually work on the days you are back, and when and for what you are paid. This article is informational and is not legal or tax advice; work through your own facts with a qualified CPA or tax attorney.

Illinois has no day threshold to clear. Under 35 ILCS 5/1501(a)(20)(A) you are a resident if you are in Illinois for other than a temporary or transitory purpose, or if you are domiciled in Illinois and absent for a temporary or transitory purpose. The whole test turns on purpose, which is why a relocation that begins with an employer is unusually easy to explain.

The Department of Revenue’s own regulation shows how much weight employment carries. 86 Ill. Adm. Code 100.3020(c) describes the person who is in Illinois for other than temporary or transitory purposes, and one of its examples is someone “employed in a position that may last permanently or indefinitely.” The regulation is written about presence in Illinois, but the logic runs the same way in reverse. An Illinois domiciliary who takes a permanent position at a headquarters that has permanently moved to Texas is not absent for a temporary purpose. The Illinois job no longer exists to return to.

The rebuttal list in subsection (f) says the same thing directly. Among the evidence it names for overcoming a presumption of Illinois residency is “the permanent or temporary nature of work assignments in a state.” It sits alongside the location of your spouse and dependents, your voter and vehicle registration and driver’s license, a resident return filed in another state, home ownership or rental agreements, professional licenses, doctors and accountants and attorneys, club memberships, and telephone or utility usage over time.

This is also where transferees weaken their own best fact without noticing. The paperwork around a corporate relocation often describes the move in temporary terms: a transition assignment, a rotation, a relocation agreement with a return-to-Illinois option, six months of corporate housing, a job title that still carries an Illinois cost center. None of that is unusual, and none of it is decisive. But if the only written record of your job says the Texas posting is provisional, you have described your own absence in the temporary terms the regulation uses for someone who has not left. Keep the offer letter or transfer notice that describes the Texas role as permanent, and keep the date on it.

The most common transferee pattern is also the most exposed. One spouse starts in Irving in January. The other stays in the Illinois house with the children until the school year ends, and the Texas spouse flies home on weekends. Nobody involved thinks of this as a residency decision. It is a residency fact pattern anyway.

The location of spouse and dependents is the first item on the subsection (f) rebuttal list, and a family home still occupied by a spouse and children is the single fact most likely to make a Texas move look temporary. Our Illinois dossier lists leaving a spouse or minor children in the Illinois home while filing as a nonresident among the most common exit mistakes on any corridor out of Illinois.

The second risk is arithmetic. 100.3020(f) presumes that an Illinois resident in one year remains one in the following year if present in Illinois more days than in any other state. Illinois has no any-part-of-a-day rule attached to a threshold, because it has no threshold, and the regulation does not spell out how a partial travel day counts for this comparison. That uncertainty is the problem. A transferee who flies to O’Hare on Thursday night and back to DFW on Monday morning touches Illinois on five days of the week and Texas on four. Depending on how the travel days are counted, a weekend-commute year can put more days in Illinois than in Texas, and a presumption rebuttable only by clear and convincing evidence follows from nothing more than an airline schedule.

The fix is not complicated, but it has to be deliberate. Decide the date the family’s domicile moves and make the records agree with it. If the household is genuinely moving in June, the working spouse can still show a Texas lease, license and registration from the start and a house listed for sale, and the family’s move date becomes the date the Illinois house stopped being anyone’s home. Keep a running count in a day count checker from the first week, not a reconstruction built from boarding passes in the spring, because the more-days comparison is exactly the kind of question that is cheap to answer in real time and expensive to answer three years later.

And if the Illinois house carries the General Homestead Exemption, remove it once no one occupies the property as a principal dwelling. Under the same subsection (f), receiving that exemption is its own presumption of Illinois residency, and it is a presumption you can end with a single filing at the county.

Here the corridor is friendlier than most. Illinois has no convenience of the employer rule. Our Illinois dossier notes that Illinois sources employee wages to where the work is physically performed rather than to where the employer is located, which is a genuine difference from New York. Being paid by a company with Illinois operations does not make your wages Illinois wages once you are a Texas resident.

The flip side is that every day you physically work in Illinois can count. Under 86 Ill. Adm. Code 100.3120(a)(1)(E), for taxable years ending on or after December 31, 2020, a nonresident whose services are performed in Illinois for more than 30 working days in the year has Illinois-source compensation equal to total compensation multiplied by Illinois working days over total working days. Illinois adopted the 30-day threshold in Public Act 101-0585, and employers have no Illinois withholding obligation for a nonresident who stays at or under it.

The definitions are precise. A working day is a day on which you perform duties for your employer; days on which you perform none, such as weekends, vacation days, sick days and holidays, are not working days. A working day is spent within Illinois if you spend more time that day performing duties in Illinois than outside it, without regard to travel time, or if the only thing you do for your employer that day is travel to an Illinois destination and arrive. Note what the threshold is and is not. It is not a deduction of the first 30 days. Once you cross it, the ratio applies to all of your Illinois working days, including the first 30.

That matters on a corridor where the company’s plants, labs and regional offices may stay in Illinois. A transferee who spends a week a month back in Peoria or Chicago for work can reach 30 Illinois working days by early summer. So can the weekend commuter who works Fridays remotely from the Illinois kitchen table: one Friday a week, less holidays and vacation, is well over 30 working days a year, and each of those Fridays is a day on which the greater part of your duties was performed in Illinois. Illinois Publication 130 describes Form IL-W-6, the Certificate of Days Worked in Illinois for Non-Residents, which a nonresident expected to work more than 30 Illinois working days completes for an employer that does not keep a time and attendance system. If your employer hands you one, treat the days you write on it as evidence that will be read later.

Relocations produce an unusual amount of compensation that lands on one side of a move date and was earned on the other: a year-end bonus, a retention award, vesting equity, deferred compensation, a relocation allowance. Illinois handles this in two layers.

The first layer is the move year itself. A part-year resident files Form IL-1040 with Schedule NR, and the instructions put the rule plainly: income received while you were an Illinois resident is taxed 100 percent, regardless of source, and income received while you were a nonresident is taxed only if it is from Illinois sources. The move date is therefore the date that sorts every payment in the transition year, which is one more reason it should be a real date supported by real records.

The second layer is what Illinois treats as Illinois-source after you are a nonresident. 86 Ill. Adm. Code 100.3120(c) presumes that compensation paid for past service was earned ratably over the employee’s last five years of service with the employer or a related company, unless there is clear and convincing evidence that it belongs to a different period. Its own examples are instructive. A lump sum in lieu of a retroactive raise, paid to someone who worked four of the last five years in Illinois, is allocated four-fifths to Illinois. The same payment shown to be a raise for a year worked entirely in another state is allocated nowhere in Illinois. And deferred compensation paid to a retired executive living in Florida is spread across the five years it was earned and tested year by year against where that work was performed. Read the logic onto a transferee and a bonus paid in March for a year spent working in Deerfield is compensation for Illinois service, whichever state you live in when it is paid. Asking payroll to push it past the move date does not change what it was paid for.

Equity needs its own paperwork. Subsection (d)(1) of the same regulation excludes from Illinois allocation items a nonresident takes into income under Internal Revenue Code sections 401 through 425, and its examples are distributions from an employees’ trust and income from a disqualifying disposition of stock acquired by exercising a qualified stock option. Nonqualified stock options and restricted stock units are not governed by those Code sections, so they fall back on the general compensation rules. The Schedule NR instructions say that when the Illinois wages on a W-2 are wrong, you attach a letter on company letterhead stating the correct Illinois wages and the number of work days in each state, and that if any of the compensation was earned in a prior year, naming deferred compensation and exercised stock options, the letter must include a detailed calculation of how the income was sourced. Ask for that calculation before you file, not after a notice arrives.

Two federal rules frame the rest. Under 4 U.S.C. 114, no state may tax the retirement income of a nonresident, which covers qualified plan distributions and nonqualified deferred compensation paid in substantially equal periodic payments over life expectancy or at least 10 years, or paid from a plan maintained solely to provide benefits above the qualified plan limits. A deferred compensation election that pays out in a shorter window does not get that protection. And relocation benefits are wages: Section 70113 of the One Big Beautiful Bill Act made the suspension of the moving expense deduction and the exclusion for employer-reimbursed moving expenses permanent from January 1, 2026, with exceptions only for members of the Armed Forces and the intelligence community. A relocation package shows up in W-2 wages, which means it has to be sorted by the same move date as everything else.

A headquarters relocation moves hundreds of people through the same human resources system at once, and address changes, state withholding elections and work-location codes do not all update on the day someone signs a Texas lease. That lag produces the document an Illinois examiner starts from.

The Schedule NR instructions tell a nonresident to enter the amount shown as Illinois wages on the Illinois copy of the W-2 received while a nonresident. If your W-2 still reports Illinois wages for months after you started working in Irving, the form contradicts your return, and the fix is the employer letter described above, with the day counts by state. Our Illinois dossier records that the Department most often opens residency inquiries around a specific triggering event, such as a large gain, a business sale or a sharp drop in Illinois income coinciding with a claimed move, rather than running broad sweeps. A transferee’s move year produces exactly that drop, and a W-2 that disagrees with the return is an easy place to start.

The window stays open a while. Per our Illinois dossier, the Department generally has three years from the later of the due date or the filing date to assess, six years where 25 percent or more of income was omitted, and no limit for a year in which no return was filed. A transferee who assumes that moving to a no-income-tax state means no Illinois filing in the move year has left that year open indefinitely. File the part-year IL-1040 and Schedule NR, and check the W-2 against it before you do.

Texas asks for almost nothing on the tax side, since there is no individual income tax return to file. What it gives you instead is a set of dated government records, and on a corridor where the Illinois question is whether the move was permanent, dated records are the point.

Per our Texas dossier, a new resident has 90 days to get a Texas driver’s license, with the out-of-state license valid for driving in the meantime, and 30 days to register a vehicle brought into the state. Voter registration must be received at least 30 days before an election to vote in it. Texas has no declaration of domicile filing like Florida’s, so intent is shown by the license, registration, voter record and homestead all pointing at the same address.

The homestead exemption is the strongest of these, because it is hard to fake. Harris Central Appraisal District describes a school district exemption of at least 140,000 dollars, a filing window from January 1 to April 30, and an appraisal cap limiting annual growth in a homestead’s appraised value to 10 percent plus new improvements. Our Texas dossier adds that a chief appraiser cannot grant the exemption unless the address on your driver’s license or state ID matches the homestead, and that Texas Tax Code sections 11.13 and 11.43 allow only one homestead exemption at a time, in Texas or any other state. For a transferee that is a neat alignment: the Texas homestead requires the Texas license, and it requires that the Illinois homestead exemption be gone.

Texas has its own costs. Our Texas dossier puts effective property tax rates commonly in the 1.6 to 2 percent range and higher, since property tax does the work an income tax would, and Texas collects use tax on vehicles bought elsewhere and brought in. For a household coming from Illinois, where the effective property tax rate is around 1.92 percent, the property tax difference may be smaller than expected. The income tax difference is a flat 4.95 percent against zero.

Set this against moving from Illinois to Florida and the Illinois analysis is identical: the same two-prong statute, the same subsection (f) presumptions, the same 30-working-day rule and the same Schedule NR. The difference is the typical mover. The Florida corridor skews toward retirees and business owners, where the hard questions are the house, the estate and the sale of a company. The Texas corridor has a large share of people who moved because a job moved, which gives them a better domicile story and a harder compensation story. Florida also offers a sworn, recorded declaration of domicile under Fla. Stat. section 222.17; Texas does not, so the homestead and license dates carry more of the load.

Set it against moving from California to Texas and the contrast is instructive. California has a narrow bright-line safe harbor for employment-related absences of at least 546 consecutive days, which fails if you keep a permanent place of abode in California. Illinois has no safe harbor of any kind, so an employment transfer out of Illinois is judged entirely on purpose and ties. California also applies a published workday apportionment to equity compensation earned while a resident. Illinois leaves more of that to the employer’s sourcing calculation, which is why the letter matters. And California rates 5 out of 5 on audit aggressiveness in our guide, against Illinois at 3, so the same thin record carries less risk leaving Illinois than leaving California. Less risk is not no risk.

Which is the honest summary of this corridor. The job moving to Texas is the best fact you will have, and it is worth protecting: in the offer letter, in the date the family moved, in the Illinois workdays you actually spent, and in the W-2 your employer eventually issues. If those records agree with each other, Illinois has very little to argue about.

The Mobility Map records days and nights by state as they happen. On this corridor that serves two different Illinois questions at once: the more-days-than-any-other-state comparison under the residency presumption, and the working-day count that decides whether and how much of your compensation is Illinois-source once you are a nonresident.

Evidence Vault holds what a transferee will be asked for: the transfer notice or offer letter describing the Texas role, the Texas lease or closing statement, the Texas driver’s license, vehicle registration and voter registration with their dates, the Texas homestead application, the county confirmation that the Illinois homestead exemption was removed, the listing or sale documents for the Illinois house, school enrollment records showing when the children moved, the part-year IL-1040 and Schedule NR, any Form IL-W-6, and the employer’s letter sourcing bonuses, deferred compensation and equity.

AuditIQ surfaces the contradictions this corridor produces most often: a spouse and children still in the Illinois home months after the claimed move, a homestead exemption still active, a W-2 reporting Illinois wages after the Texas start date, Illinois working days above 30 for a claimed nonresident, and a large bonus or vesting event close to the move date. Advisor sharing lets a CPA or tax attorney review the presence record, the payroll records and the transition-year return together.

ResidencyIQ organizes records and highlights potential exposure factors. It is not a law firm or an accounting firm and does not provide legal or tax advice; work with a qualified CPA or tax attorney on your own domicile, filings, and state exposure.

Caterpillar’s June 14, 2022 announcement moving its global headquarters from Deerfield, Illinois to Irving, Texas, the roughly 240 headquarters employees, and the continuing Illinois workforce of about 17,400 across East Peoria, Mapleton, Mossville, Pontiac and Decatur are reported by 25 News Now (WEEK-TV), June 14, 2022: https://www.25newsnow.com/2022/06/14/caterpillar-moving-global-headquarters-irving-texas/.

The two-prong definition of an Illinois individual resident is 35 ILCS 5/1501(a)(20)(A): https://www.ilga.gov/Documents/legislation/ilcs/documents/003500050K1501.htm. The subsection (c) description of a person “employed in a position that may last permanently or indefinitely” as present for other than temporary or transitory purposes, the subsection (f) presumptions for homestead exemption recipients and for a prior-year resident present in Illinois more days than in any other state, and the subsection (f) list of rebuttal evidence including the location of spouse and dependents and “the permanent or temporary nature of work assignments in a state,” are in 86 Ill. Adm. Code 100.3020: https://www.law.cornell.edu/regulations/illinois/Ill-Admin-Code-tit-86-SS-100.3020.

The 30-working-day rule for nonresidents for taxable years ending on or after December 31, 2020, the definitions of a working day and a working day spent within Illinois, the five-year ratable presumption for compensation paid for past service and its examples, and the subsection (d)(1) exclusion of items taken into income under IRC sections 401 through 425, are in 86 Ill. Adm. Code 100.3120: https://www.law.cornell.edu/regulations/illinois/Ill-Admin-Code-tit-86-SS-100.3120. The enactment of the 30-day threshold by SB 1515, Public Act 101-0585, for tax years ending on or after December 31, 2020, is described by EY Tax News, September 16, 2019: https://taxnews.ey.com/news/2019-1632-illinois-new-30-day-threshold-for-nonresident-taxability-also-provides-relief-for-residents. Form IL-W-6 and the withholding exemption for nonresidents at or under 30 Illinois working days are described in Illinois Department of Revenue Publication 130: https://tax.illinois.gov/research/publications/pubs/who-is-required-to-withhold-illinois-income-tax/withholding-illinois-income-tax-for-my-employees.html.

The rule that part-year residents are taxed on 100 percent of income received while a resident and on Illinois-source income received while a nonresident, the instruction to use the Illinois wages on the Illinois copy of the W-2, and the requirement of an employer letter on company letterhead stating correct Illinois wages, work days by state, and a detailed sourcing calculation for deferred compensation and exercised stock options, are in the 2025 Schedule NR instructions: https://tax.illinois.gov/forms/incometax/currentyear/individual/il-1040-schedule-nr-instr.html.

The prohibition on state taxation of a nonresident’s retirement income, including the substantially equal periodic payment and 10-year conditions and the excess benefit plan provision for nonqualified deferred compensation, is 4 U.S.C. 114: https://www.law.cornell.edu/uscode/text/4/114. The permanent suspension of the moving expense deduction and the exclusion for employer-reimbursed moving expenses under Section 70113 of the One Big Beautiful Bill Act, with exceptions for the Armed Forces and the intelligence community, is described by Larry J. Brant, Foster Garvey, March 10, 2026: https://www.foster.com/newsroom/blog/larrys-tax-law/one-big-beautiful-bill-act-part-8-worker-moving-expenses/.

The Texas school district homestead exemption of at least 140,000 dollars, the January 1 to April 30 filing window, and the 10 percent appraisal cap are from Harris Central Appraisal District: https://hcad.org/hcad-help/texas-first-time-property-owner/exemptions/property-tax-exemptions-for-homeowners.

The Illinois and Texas exit stickiness and audit aggressiveness ratings, Illinois’s lack of a convenience of the employer rule, the common exit mistake of leaving a spouse or children in the Illinois home, the description of the Department opening residency inquiries around triggering events, the three-year, six-year and unlimited assessment periods, the roughly 1.92 percent Illinois effective property tax rate, the Texas 90-day license, 30-day vehicle registration and 30-day voter registration deadlines, the absence of a Texas declaration of domicile, the license address match requirement and one-homestead rule under Texas Tax Code sections 11.13 and 11.43, Texas effective property tax rates and use tax, and the California 546-day safe harbor, workday apportionment of equity compensation and audit rating come from ResidencyIQ’s own dossier research, with underlying citations on the Illinois, Texas and California residency guides.