Illinois Income Tax Rates for 2025

These reduce a taxpayer’s total tax bill by some amount, which is in contrast to tax deductions, which only reduce a taxpayer’s taxable income. If you paid $1,000 in property taxes in 2024, you could claim a credit of $50 on your income tax return, which equates to $50 less that you end up paying in taxes. The Illinois Fair Tax was a proposed amendment to the Illinois state constitution that would have effectively changed the state income tax system from a flat tax to a graduated income tax.

How Your Illinois Paycheck Works

Among the most important items that are taxable federally but not in Illinois are retirement and Social Security income, as well as distributions from a 529 college savings plan. Income tax deductions are expenses that can be deducted from your gross pre-tax income. Using deductions is an excellent way to reduce your Illinois income tax and maximize your refund, so be virtual accountant sure to research deductions that you mey be able to claim on your Federal and Illinois tax returns.

14: First attempts to pass graduated income tax in Illinois

Most tax preparers can electronically file your return for you, or you can do it yourself using free or paid income tax software, like the examples listed below. The general merchandise sales tax applies to almost all other products purchased for use in Illinois. Cook, Kane and Warren counties are home to the state’s highest combined sales tax rates of 11.50%, 11% and 11%, respectively. When filing an income tax return in Illinois, taxpayers begin with their federal taxable income. From there, certain items may be added back in, and others may be subtracted.

How You Can Affect Your Illinois Paycheck

The three categories are qualifying illinois income tax rate food and drugs, vehicles and general merchandise. Proponents argued that the proposal would make the Illinois tax code fairer, provide tax relief to most Illinoisans, better fund public goods and social services, and boost small businesses. If you have a lot of income that comes from non-work sources, like investments, the amount your employer withholds from your paychecks might not be enough to avoid ending up with a big tax bill. In this scenario, you may wish to fill out a new W-4 form and request that your employer withhold an additional amount from each of your paychecks. You can also pay estimated taxes every quarter to cover your bases with the IRS.

• As simple as Illinois tries to make income tax, the state seems to take the opposite approach with sales taxes.
• If you’re paid more frequently, each of your paychecks will be smaller.
• A financial advisor can help you understand how taxes may impact your overall financial goals.
• For comparison purposes, however, your Illinois tax bracket is the tax bracket in which your last earned dollar in any given tax period falls.
• If you double-claim allowances while holding more than one job, you’ll owe more money at tax time.

Illinois also accepts online payments of your tax debt with credit cards and debit cards, or through a bank transfer. There is, however, a convenience fee for the use of a credit or debit gross vs net card when paying your taxes. If you are thinking of taking a new job and moving to Illinois, check out our Illinois mortgage guide for the ins and outs of getting a mortgage in the Prairie State.

• Together these are called FICA taxes, and your employer will pony up a matching contribution.
• Income tax deductions are expenses that can be deducted from your gross pre-tax income.
• If you eFile your taxes, you can expect to receive your income tax refund sooner and will be able to get instant verification of your tax return submission.
• There is, however, a convenience fee for the use of a credit or debit card when paying your taxes.
• Estates over that amount must file an Illinois estate tax return and face tax rates up to 16%.

Illinois Property Tax

If you file your taxes as single, any earnings you make in excess of $200,000 will be subject to an additional 0.9% Medicare tax, which is not matched by your employer. Joint filers making over $250,000, and married individuals with more than $125,000 filing separately, also pay the Medicare surtax. Illinois has a flat income tax of 4.95%, which means everyone’s income in Illinois is taxed at the same rate by the state. No Illinois cities charge a local income tax on top of the state income tax, though.

• 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%.
• The Earned Income Tax Credit is currently 20% of the federal credit by the same name.
• The Federal income tax also has a standard deduction, personal exemptions, and dependant deductions, though they are different amounts than Illinois’ and may have different rules.
• Some employees in Illinois might have more money taken from each paycheck.
• Beer will generally be subject to a rate of 23 cents per gallon while wine and liquor are subject rates of $1.39 and $8.55 per gallon, respectively.

The state of Illinois has a flat income tax, which means that everyone, regardless of income, is taxed at the same rate. That makes it relatively easy to predict the income tax you will have to pay. The income tax rate in Illinois is 4.95%, after an increase from 3.75% in 2017.

Proposed constitutional amendment

Your employer will also withhold money from each of your paychecks to put toward your federal income taxes. The percentage that’s withheld will depend on things such as your income, your filing status (single, married filing jointly, etc.) and any tax credits you indicate on your W-4 form. The proposed amendment grants the State authority to impose higher income tax rates on higher income levels, which is how the federal government and a majority of other states do it. The amendment would remove the portion of the Revenue Article of the Illinois Constitution that is sometimes referred to as the “flat tax,” that requires all taxes on income to be at the same rate. It gives the State the ability to impose higher tax rates on those with higher income levels and lower tax rates on those with middle or lower income levels. You are asked to decide whether the proposed amendment should become a part of the Illinois Constitution.

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. Some accounts, like a 401(k), FSA or HSA, allow you to make pre-tax contributions. That means the money comes out of your paycheck before income taxes do.