Illinois Tax Guide for Residents

Let's be honest: Illinois taxes are significant. Understanding them helps you plan.

Income Tax

State Rate

Illinois has a flat income tax: 4.95% on all income.

Comparison:

• Simpler than progressive systems

• Lower than coastal states on high incomes

• Higher than neighbors (Indiana 3.15%, Wisconsin varies)

Local Income Tax

• No city or county income taxes in Illinois

• (Unlike some states where cities add more)

Filing

• Due April 15 (same as federal)

• E-file through Illinois MyTax

• Most tax software handles state automatically

Property Tax

The Big One

Illinois property taxes are among the nation's highest.

Effective rates (2024):

• State average: ~2.1%

• Some collar counties: 2.5%+

• Cook County varies widely

• Downstate generally lower

How It Works

• County assesses property value

• Apply exemptions (see below)

• Multiply by local tax rate

• Rate is combination of school, village, county, etc.

Key Exemptions

Homeowner Exemption Reduces EAV by $10,000 (Cook County) or $6,000 (elsewhere).

Senior Exemption Additional $8,000 reduction for 65+.

Senior Freeze Freezes assessment (not tax rate) for qualifying seniors.

Appeals

You can (and should consider) appealing:

• Within 30 days of assessment notice

• Compare to similar properties

• Many succeed in reducing assessments

• Professional help available for complex cases

Sales Tax

Base Rates

• State: 6.25%

• Most areas add local taxes

• Total often 9-10%+ in Chicagoland

What's Taxed/Exempt

Exempt:

• Unprepared grocery food

• Prescription medications

• Medical equipment

Taxed:

• Prepared food (restaurants, deli)

• Clothing

• Electronics

• Most retail purchases

The Chicago Premium

Chicago adds additional:

• City tax

• RTA tax

• Various smaller taxes

• Restaurant tax (higher for dine-in)

Vehicle Taxes

Registration

• Annual registration: ~$151 (varies by vehicle)

• No personal property tax on vehicles (unlike Missouri)

City Stickers

Chicago and some suburbs require:

• Chicago city sticker: ~$95/year

• Suburban villages vary

• Tickets for missing sticker are expensive

Other Taxes to Know

Gas Tax

Illinois gas tax is high (38 cents/gallon state + federal + local).

Cannabis Tax

If applicable: 10-25% depending on THC content, plus sales tax.

Estate Tax

Illinois has its own estate tax above $4 million.

Tax Planning Tips

1. Max out retirement contributions - Reduces state taxable income

2. Review property assessment annually - Appeal if overvalued

3. Claim all exemptions - Many people miss homeowner exemption

4. Consider a financial advisor - Illinois taxes are complex

5. Keep moving/relocation receipts - Some deductions available