Illinois State Tax Guide


Illinois taxes your income earned while living in Illinois or earned in the state each year. The state of Illinois requires you to pay taxes if you’re a resident or nonresident that receives income from an Illinois source. The state income tax rates are 4.95%, and the sales tax rate is 1% for qualifying food drugs and medical appliances and 6.25% on general merchandise. Illinois’ current individual income tax rate is a flat 4.95% for everyone, regardless of how much money they make. Itemized and standard deductions are not allowed in Illinois, which is consistent with the state’s flat tax system. Available tax credits can reduce the amount of tax owed, however.

Why are Illinois taxes so high?

Illinoisans face the second highest property tax rates in the country, in part because it has so many state employees with salaries and benefits over $100,000, and retirees with six-figure pensions.

For more information, view the Frequent Asked Questions. The 100 percent exemption for the majority blended ethanol fuel, 100 percent biodiesel, and biodiesel blends with more than 10 percent but no more the 99 percent biodiesel, is extended through December 31, 2023. Three 501 organizations have been formed to support the Fair Tax amendment.

Compare Your After-Tax Income To Other States

This what is illinois income tax rate estimates the average tax rate as the state income tax liability divided by the total gross income. The guide, first published on Feb. 3, 2023, was updated on Feb. 7 with updated information about state and local sales tax rates. Illinois’ flat income tax rate means that every resident, regardless of income level, pays the same individual income tax rate of 4.95 percent. Before the official 2023 Illinois income tax rates are released, provisional 2023 tax rates are based on Illinois’ 2022 income tax brackets. To e-file your Illinois and Federal income tax returns, you need a piece of tax software that is certified for eFile by the IRS. While most in-depth tax software charges a fee, there are several free options available through the states, and simple versions are also offered free of charge by most tax software companies.

tax plan

Guzzardi said his plan would work like another form of an income tax. Tax collections by source as a percentage of total tax collections in 2013. In fiscal year 2015, Illinois’ business tax climate was ranked 31st in the nation. The table below provides scores and rankings for Illinois and neighboring states. A 4% tax rate is collected by the Town of Normal on all packaged liquor sales. A portion of this tax supports specific Police Department operations.

Illinois Property Tax

The United States federal government, via the Internal Revenue Service, uses a graduated income tax. | Illinois has some of the highest average property and sales tax rates in the country. The state uses a flat income tax rate but doesn’t tax retirement income or Social Security. Senator Harmon’s proposal was estimated to reduce the tax bill of the Illinois median taxpayer (making $55,317 per year) by $303 per year versus the 5 percent rate. Allowing 2014 law to continue would reduce the median taxpayer’s bill by $689 per year, an additional savings of $386 versus the Harmon rates. Other speculative proposals had called for top marginal rates as high as 11 percent, but they were not introduced in the state legislature.

  • The diesel tax rate is also quite high at 46.7 cents per gallon.
  • Of this tax, a portion is distributed to the Bloomington-Normal Area Convention and Visitors Bureau, while the remaining amount is used to support the Uptown Renewal Program.
  • Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals.
  • Securities and Exchange Commission as an investment adviser.
  • Once you’ve calculated each employee’s net pay by implementing deductions and withholdings, you’re good to cut those checks.
  • The highest combined sales tax in Illinois is 10.75% which belongs to the cities of Berwyn and Cicero.
  • Cable tax rates are 5% of gross receipts for cable charges.

In Illinois, the median property tax rate is $2,073 per $100,000 of assessed home value. Enrollment in, or completion of, the H&R Block Income Tax Course or Tax Knowledge Assessment is neither an offer nor a guarantee of employment. There is no tuition fee for the H&R Block Income Tax Course; however, you may be required to purchase course materials, which may be non-refundable. The Income Tax Course consists of 62 hours of instruction at the federal level, 68 hours of instruction in Maryland, 80 hours of instruction in California, and 81 hours of instruction in Oregon. Additional time commitments outside of class, including homework, will vary by student.

Local Motor Fuel Tax

Nonresidents who work in Illinois also must pay income tax to the state, unless they live in Wisconsin, Iowa, Kentucky or Michigan. These states have reciprocal agreements with Illinois, so you only pay income tax to the state where you primarily live, not the state where you work. To stem property tax growth, Illinois could increase state funding for K-12 education and consolidate townships. If calculating payroll taxes ever starts to feel like a burden, you might want to review our list of signs it’s time to outsource your payroll. If you have any questions about how to use our Illinois payroll calculator, you can always find definitions and more detailed information in our guide to the payroll process. And keep in mind that we offer easy and affordable online payroll services if you ever want any outside help.

If you are not a resident of Illinois, have a complicated tax return, or have other specialized circumstances you may need to download additional tax forms from the website. You can find all of Illinois’ 2023 income tax forms on the income tax forms page . Illinois collects a state income tax at a maximum marginal tax rate of %, spread across tax brackets. Unlike the Federal Income Tax, Illinois’ state income tax does not provide couples filing jointly with expanded income tax brackets. Now that we’re done with federal taxes, let’s look at Illinois state income taxes.

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