What are the best CD rates in Illinois right now?

As of May 2026, the best CD rates available to Illinois residents reach approximately 4.50%–4.75% APY at top online banks including Ally, Marcus, and Discover Bank. Illinois credit unions such as Alliant Credit Union (Chicago-based, open to all US residents) offer competitive share certificate rates. Rates change frequently — verify before opening.

Is CD interest taxable in Illinois?

Yes. Illinois imposes a flat 4.95% state income tax on all income, including CD interest. This flat rate applies to all Illinois residents regardless of income level. Combined with the 22% federal bracket, a typical IL resident pays approximately 26.95% total marginal tax on CD interest.

What is Alliant Credit Union and can Illinois residents join?

Alliant Credit Union is a Chicago-based credit union that has opened membership to all US residents — not just Illinois residents. It consistently offers highly competitive share certificate (CD) rates, sometimes matching or exceeding top online banks. It is NCUA-insured and has no branch network (online only). Alliant is one of the best national credit union options for CD savers regardless of location.

Are Treasury bills better than CDs for Illinois residents?

Treasury bill interest is exempt from Illinois state income tax (though still subject to federal tax). For an Illinois resident in the 22% federal bracket paying 4.95% state tax, the T-bill state exemption is meaningful: a T-bill at 4.35% APY may produce a similar after-tax yield to a CD at 4.65% APY. Illinois residents should compare after-tax yields when choosing between CDs and T-bills.

Does Illinois tax retirement income including CD interest in IRAs?

Illinois does not tax most retirement income — including distributions from IRAs, 401(k)s, and pensions from a qualifying retirement plan. However, CD interest earned in a taxable account (not inside a retirement account) is fully taxable at the 4.95% flat rate in the year it is earned. CDs held inside a Roth IRA grow and distribute tax-free at the federal and Illinois state level.

Illinois CD Rates 2026 — Best CDs Available to IL Residents

Illinois residents pay a flat 4.95% state income tax on CD interest — a moderate rate, but one that meaningfully reduces the after-tax yield on CDs. The best CD rates available to IL residents reach 4.75% APY in May 2026 through FDIC-insured online banks. Chicago-based Alliant Credit Union is also a standout national option available to Illinois residents (and anyone in the US).

Rates shown are as of May 2026 and change frequently. Verify current rates directly with the institution before opening.

Best CD Rates Available to Illinois Residents (May 2026)

Institution	Type	12-Month APY	Min. Deposit
Online banks (Ally, Marcus, Discover, CIT)	Online	4.50–4.75%	$0–$2,500
Alliant Credit Union	National CU (IL-based)	4.25–4.65%	$1,000
Wintrust Financial	IL community bank	3.75–4.25%	$1,000
Byline Bank	IL community bank	3.75–4.25%	$1,000
Traditional big banks	National bank	0.01–1.00%	$1,000+

Illinois Flat Income Tax on CD Interest

Illinois has a flat 4.95% personal income tax on all income including CD interest. No deductions, credits, or progressive brackets — every Illinois resident pays the same 4.95% on CD earnings.

After-tax yield on a 4.65% APY CD for an IL resident (22% federal + 4.95% state):

Total marginal rate: ~26.95%
After-tax yield: ~3.40%

T-Bills vs. CDs for Illinois Residents

Treasury bill interest is exempt from Illinois state income tax.

	12-Month CD	12-Month T-Bill
Gross yield	4.65%	4.35%
Federal taxable	Yes	Yes
IL state taxable (4.95%)	Yes	No
After-tax yield (22% fed + 4.95% IL)	~3.40%	~3.40%

In Illinois, the after-tax yields on CDs and T-bills are roughly equivalent for typical rates in 2026. If T-bill rates come close to CD rates, the state tax exemption makes T-bills the better choice for Illinois residents. Compare directly before opening.

What $10,000 Earns at Top Available IL Rates

Term	APY	Gross Interest	After-Tax (22% fed + 4.95% IL)
6 months	4.40%	~$219	~$160
12 months	4.65%	~$465	~$340
2 years	4.10%	~$838	~$613

Illinois Retirement Income Tax Exemption

Illinois does not tax retirement income — including IRA distributions, 401(k) distributions, and pension income from qualifying plans — regardless of age. This means:

CD interest earned inside a Roth IRA: grows tax-free federally; distributions tax-free in Illinois ✅
CD interest earned inside a Traditional IRA: tax-deferred; distributions taxed federally but not by Illinois ✅
CD interest earned in a taxable account: taxed at 4.95% IL rate in the year earned ❌

If you’re building savings for retirement, holding CDs inside a Roth IRA may be especially advantageous for Illinois residents because the 4.95% state tax is permanently avoided on qualifying distributions.

Notable Illinois Options

Alliant Credit Union — Chicago-based; open to all US residents; NCUA-insured; rates often match top online banks
Wintrust Financial — Chicago-based community banking group; competitive institutional rates for larger deposits
Byline Bank — Chicago-based; multiple IL branches; competitive CD rates for relationship customers

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy