Illinois’ maximum marginal income tax rate is the 1st highest in the United States, ranking directly below Illinois’ %. You can learn more about how the Illinois income tax compares to other states’ income taxes by visiting our map of income taxes by state. There are a few exceptions, including military pay you received as a civilian.Nonresidents — those who only live in the state because of military assignment — are not required to report military pay to Illinois. Illinois has no state tax on inheritance, but you are required to file on all estates of $4 million or more. The 2025 tax payroll rates and thresholds for both the Illinois State Tax Tables and Federal Tax Tables are comprehensively integrated into the Illinois Tax Calculator for 2025.
- Illinois offers tax credits and deductions to lower taxable income or tax liability.
- The property tax credit allows taxpayers to claim 5% of Illinois property tax paid on their principal residence.
- For families, students, and workers considering a move to Illinois, the flat income tax rate offers simplicity but may not lower your overall tax burden due to other state taxes.
- Food, drugs and medical appliances are all subject to a statewide tax rate of 1% of purchase price, in addition to local taxes of up to 1.25%, for a total tax of up to 2.25%.
- As reported by VisaVerge.com, the flat income tax rate in Illinois is both a strength and a weakness.
Illinois state income tax rates and tax brackets
Income from Illinois sources if your adjusted gross income is higher than your Illinois exemption allowance. Our Illinois mortgage rates guide has important information about mortgages in the Prairie State that will help make the process of getting a mortgage a bit easier – whether you’re looking to purchase a property or refinance. In general, the rate ranges from 6.25% to over 8.50%, depending on where the vehicle is purchased. Owner-to-owner sales, however, are subject to a lower rate, which depends on the price of the vehicle and, in some situations, the model year. A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you.
Illinois Income Tax: Rates, Calculations, and Filing Guide
Certain nonresidents who earned income in the state, as well as Illinois residents whose employers were located in another state, also may have to file taxes in Illinois. Read the Illinois Department of Revenue’s filing requirements for more. While some neighboring states have recently changed their tax systems—such as Indiana lowering its flat illinois income tax rate rate to 3% and Iowa moving to a flat rate of 3.8%—Illinois has chosen to keep its approach steady. This consistency is important for residents, employers, and anyone considering a move to Illinois, as it provides predictability in financial planning. The 2.11% effective property tax rate in Illinois is second-highest in the nation, behind only New Jersey.
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This form must be submitted within three years of the original filing date or within two years of the tax payment date, whichever is later. Taxpayers disputing an assessment or decision by the Illinois Department of Revenue can appeal through the Illinois Independent Tax Tribunal or the Circuit Court. The Tax Tribunal offers a less formal and more cost-effective way to resolve disputes. 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.
IRS Issues Guidance on the Taxation of State Tax Payments Issued in 2022
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- The Earned Income Tax Credit is currently 20% of the federal credit by the same name.
- It’s important to look at your complete financial picture, including property taxes, sales taxes, and any local taxes, when deciding where to live.
- Employers in Illinois must withhold state income tax from employees’ wages based on Form IL-W-4, Employee’s Illinois Withholding Allowance Certificate, and remit these amounts to the Illinois Department of Revenue.
- SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you.
- Join AARP for just $15 for your first year when you sign up for automatic renewal.
Join AARP for just $15 for your first year when you sign up for automatic renewal. Gain instant access to exclusive products, hundreds of discounts and services, a free second membership, and a subscription to AARP The Magazine. All income How to Invoice as a Freelancer received while a resident, plus income from Illinois sources while a nonresident. There are three types of residency statuses when it comes to Illinois state tax.