Illinois vs South Dakota: Business Hiring Cost Comparison (2026)
A $60K employee costs $65,738 in Illinois and $65,490 in South Dakota. South Dakota saves $248/year per hire.
South Dakota is $248 per year cheaper than Illinois for a $60,000 employee in 2026, with total employer costs of $65,490 vs $65,738 including all mandatory payroll taxes.
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At a $60,000 salary
South Dakota saves $248/employee/year
$65,738 in Illinois vs $65,490 in South Dakota
Illinois
$65,738
1.1x salary
South Dakota
$65,490
1.09x salary
Shareable Insights
SUTA accounts for 98% of the gap
$242 difference in SUTA alone between these states.
Cost Breakdown Comparison
Based on $60,000 annual salary
| Cost Component | IL | SD | Diff |
|---|---|---|---|
| Base Salary | $60,000 | $60,000 | — |
| Social Security (6.2%) | $3,720 | $3,720 | — |
| Medicare (1.45%) | $870 | $870 | — |
| FUTA (0.6%) | $42 | $42 | — |
| SUTA (State Unemployment) | $392 | $150 | +$242 |
| Workers' Compensation | $714 | $708 | +$6 |
| Total Employer Cost | $65,738 | $65,490 | +$248 |
Tax Rate Comparison
| Rate | Illinois | South Dakota |
|---|---|---|
| SUTA Rate Range | 0.5% – 6.75% | 0.0% – 9.5% |
| SUTA Typical Rate | 2.75% | 1.0% |
| SUTA Wage Base | $14,250 | $15,000 |
| Workers' Comp Rate | 1.19% | 1.18% |
| State Income Tax | Yes | No |
What This Means for Employers
For a business hiring at a $60,000 salary, choosing South Dakota over Illinois saves $248 per employee per year in employer-side payroll costs alone. For a team of 10, that's $2,479 annually — enough to fund an additional hire or significantly offset operating costs.
The biggest difference comes from SUTA (state unemployment tax) — Illinois charges 2.75% on the first $14,250 vs South Dakota's 1.0% on $15,000. The rate difference of 1.75 percentage points is significant because SUTA is levied on every employee and adjusts annually based on your unemployment claims history. Federal taxes — Social Security (6.2%), Medicare (1.45%), and FUTA (0.6%) — are identical in both states and account for the majority of employer tax burden.
These numbers reflect employer-side costs only and don't include benefits, overhead, or the employee's own tax burden. Use the interactive Employee Cost Calculator to model different salary levels and benefits packages.
Choosing Between Illinois and South Dakota?
Cost alone favors South Dakota: At a $60K salary, you save $248 per employee — a real number that compounds across a growing team. At 20 employees, that's $4,958/year before factoring in any raises.
When Illinois might still make sense: If your business depends on talent concentrated in Illinois — tech workers, finance professionals, specialized trades — the labor market access may outweigh the payroll cost premium. Remote-friendly roles, however, make the $248/employee savings a strong argument for South Dakota-based registration.
What this comparison doesn't capture: State income tax (employee side) affects your offer competitiveness — employees in high-tax states need higher gross pay to net the same take-home. Illinois has state income tax; South Dakota has no state income tax. This affects what salary you need to offer to attract equivalent candidates.
State Employment Profiles
Illinois
Illinois has a higher employer tax profile than most Midwest neighbors, with a $14,250 SUTA wage base and elevated workers' compensation costs tied to its comprehensive system.
financial services, food manufacturing, transportation & logistics (O'Hare hub)
Chicago-area employers frequently benchmark total employment cost against Wisconsin and Indiana, where SUTA and workers' comp rates can be meaningfully lower.
South Dakota
South Dakota has no state income tax, a $15,000 SUTA wage base, and no paid family leave mandate, creating a very low employer overhead environment.
financial services (credit card banks), healthcare, agriculture
South Dakota's permissive banking regulations have attracted major credit card issuing banks (Wells Fargo, Citibank); these operations pay wages well above the state median.
Employer Environment in Each State
Key factors that shape employer costs beyond the numbers above
- State income tax applies — factor into total compensation packages
- Above-average SUTA rate (2.75% on $14,250 wage base) — one of the higher state unemployment rates nationally
- Workers' comp rate 1.19% — near national average, varies by industry classification
- No state income tax — employees keep more of their paycheck, a recruiting advantage
- Low SUTA rate (1.0% on $15,000 wage base) — below-average unemployment insurance cost
- Workers' comp rate 1.18% — near national average, varies by industry classification
Hiring Strategy Takeaway
The $248 per-employee cost gap at $60K salary is primarily driven by SUTA rates (IL: 2.75% vs SD: 1.0%). South Dakota's lack of state income tax gives it a recruiting edge — employees take home more pay for equivalent salaries. For a growing business, this difference compounds quickly — a 10-person team in South Dakota costs $2,479 less annually than the same team in Illinois, before accounting for benefits, overhead, or salary-level differences.
Explore Each State
Cost Comparison at Different Salary Levels
How the gap changes from $30K to $150K
| Salary | IL Total | SD Total | Difference |
|---|---|---|---|
| $30,000 | $33,086 | $32,841 | +$245 |
| $40,000 | $43,970 | $43,724 | +$246 |
| $50,000 | $54,854 | $54,607 | +$247 |
| $60,000 | $65,738 | $65,490 | +$248 |
| $75,000 | $82,064 | $81,815 | +$249 |
| $100,000 | $109,274 | $109,022 | +$252 |
| $125,000 | $136,484 | $136,230 | +$254 |
| $150,000 | $163,694 | $163,437 | +$257 |
Click any amount to see the full cost breakdown for that salary and state. Amounts shown from the perspective of IL.
What About Startup Costs?
Hiring is one piece. See what it costs to actually open in these states.
Illinois
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