Illinois has a flat 4.95% income tax — the same rate applies to all income levels, making it simple but not always favorable.
Illinois Tax Rate 2026
| Tax Type | Rate |
|---|---|
| State income tax | 4.95% (flat) |
| Chicago city tax | None |
| Capital gains | 4.95% (same as income) |
Illinois is one of 11 states with a flat income tax rate.
How Illinois Flat Tax Works
| Taxable Income | Tax Rate | Tax Amount |
|---|---|---|
| $25,000 | 4.95% | $1,238 |
| $50,000 | 4.95% | $2,475 |
| $75,000 | 4.95% | $3,713 |
| $100,000 | 4.95% | $4,950 |
| $150,000 | 4.95% | $7,425 |
| $200,000 | 4.95% | $9,900 |
| $500,000 | 4.95% | $24,750 |
| $1,000,000 | 4.95% | $49,500 |
The flat rate means high earners pay a lower effective rate than in progressive states.
Illinois Personal Exemption
| Filing Status | Exemption Amount |
|---|---|
| Single | $2,625 |
| Married (each spouse) | $2,625 |
| Each dependent | $2,625 |
Example: Married couple with 2 kids: $2,625 × 4 = $10,500 exemption
Illinois Tax Calculation Example
Single filer earning $75,000:
- Gross income: $75,000
- Personal exemption: -$2,625
- Taxable income: $72,375
- Tax rate: × 4.95%
- Tax owed: $3,583
Illinois vs. Neighboring States
| State | Rate | Type |
|---|---|---|
| Illinois | 4.95% | Flat |
| Iowa | 4.4-6.0% | Progressive |
| Wisconsin | 3.5-7.65% | Progressive |
| Indiana | 3.05% | Flat |
| Missouri | 4.95% | Progressive |
| Kentucky | 4.0% | Flat |
Indiana has a lower flat rate; Wisconsin has higher top rates.
Illinois Retirement Income
Illinois is very tax-friendly for retirees:
| Income Source | Illinois Tax |
|---|---|
| Social Security | Not taxed |
| 401(k)/403(b) withdrawals | Not taxed |
| Traditional IRA | Not taxed |
| Pension (public & private) | Not taxed |
| Roth distributions | Not taxed |
| Investment income | Taxed at 4.95% |
Illinois is one of the few states that completely exempts retirement income.
Illinois Property Tax
While income tax is moderate, property taxes are among the highest:
| Metric | Illinois |
|---|---|
| Average effective rate | 2.08% |
| National rank | 2nd highest |
| On $300,000 home | ~$6,240/year |
Property Tax by County
| County | Average Rate |
|---|---|
| Lake | 2.78% |
| Kane | 2.57% |
| Will | 2.46% |
| DuPage | 2.12% |
| Cook (Chicago) | 2.10% |
| Champaign | 2.14% |
Illinois Sales Tax
| Rate Type | Amount |
|---|---|
| State sales tax | 6.25% |
| Local additions | 0-4.75% |
| Chicago total | 10.25% |
Sales Tax by City
| City | Total Rate |
|---|---|
| Chicago | 10.25% |
| Aurora | 8.75% |
| Naperville | 7.75% |
| Springfield | 8.75% |
| Rockford | 8.25% |
Chicago has one of the highest combined sales tax rates in the nation.
Who Must File Illinois Taxes?
You must file if:
- Illinois resident with federal filing requirement
- Part-year resident with Illinois income
- Nonresident with Illinois source income
No separate filing threshold — if you file federal, you likely file Illinois.
Illinois Tax Credits
| Credit | Amount |
|---|---|
| Property Tax Credit | 5% of property taxes paid |
| Earned Income Credit | 20% of federal EITC |
| Education Expense Credit | 25% up to $750 per family |
| Angel Investment Credit | 25% of qualifying investment |
Illinois Property Tax Credit
You can claim a credit of 5% of property taxes paid on your principal residence (up to $5,000 credit).
Example: $8,000 property taxes paid × 5% = $400 credit
Illinois Education Expense Credit
| Expense | Credit |
|---|---|
| K-12 tuition, books, lab fees | 25% of expenses |
| Maximum expenses | $500/student |
| Maximum credit | $125/student |
| Family maximum | $750 |
Illinois Standard Deduction
Illinois does not have a standard deduction. You start with federal AGI and subtract the personal exemption.
| Step | Amount |
|---|---|
| Federal AGI | Your federal adjusted gross income |
| Minus: Personal exemptions | $2,625 per person |
| Equals: Illinois taxable income | What you pay 4.95% on |
Illinois Tax Brackets Comparison
How Illinois compares to progressive states on $100,000 income:
| State | Tax on $100K | Effective Rate |
|---|---|---|
| California | $5,911 | 5.91% |
| New York | $5,411 | 5.41% |
| Illinois | $4,950 | 4.95% |
| Pennsylvania | $3,070 | 3.07% |
| Texas | $0 | 0% |
Illinois is middle-of-the-pack at $100,000 income.
Illinois Tax on High Earners
How Illinois compares on $500,000 income:
| State | Tax on $500K | Effective Rate |
|---|---|---|
| California | $49,511 | 9.90% |
| New York | $31,959 | 6.39% |
| New Jersey | $35,918 | 7.18% |
| Illinois | $24,750 | 4.95% |
High earners benefit from Illinois’s flat rate structure.
Illinois Filing Options
| Method | Cost |
|---|---|
| MyTax Illinois | Free (state e-file) |
| Commercial software | $0-$50 |
| Tax professional | $100-$300+ |
Filing deadline: April 15
Illinois Tax Strategies
1. Maximize Retirement Contributions
Reduce federal AGI (which is the starting point for Illinois tax).
2. Property Tax Credit
Always claim if you own your home — it’s automatic but often missed.
3. Education Credit
Save receipts for K-12 educational expenses.
4. Time Income (Flat Rate Benefit)
No bracket creep in Illinois — lumpy income isn’t penalized.
Illinois Business Taxes
| Tax | Rate |
|---|---|
| Corporate income tax | 7.0% |
| Corporate replacement tax | 2.5% |
| Total corporate | 9.5% |
| S-Corp/LLC (pass-through) | 4.95% |
Is Illinois a High-Tax State?
Yes, overall:
- Income tax: 4.95% (moderate)
- Property tax: 2.08% (2nd highest)
- Sales tax: Up to 10.25% (high)
Tax-friendly for:
- Retirees (no retirement income tax)
- High earners (flat rate better than progressive)
- Low property value owners
- Those who rent (avoid property tax)
Bottom Line
Illinois has a flat 4.95% income tax — simple and favorable for high earners compared to progressive states. However, property taxes (2.08% average) and sales taxes (up to 10.25%) are among the highest in the nation. The bright spot is retirement income — Illinois exempts Social Security, pensions, and 401(k)/IRA withdrawals entirely, making it attractive for retirees despite other high taxes.