Illinois Flat Tax Rate
Illinois imposes a flat income tax rate of 4.95% on all taxable income. This simplifies state tax calculation significantly — your Illinois tax is simply your Illinois-adjusted gross income multiplied by 0.0495. There are no brackets, no phase-outs based on income, and no need to look up rate tables.
A flat tax means a person earning $40,000 and a person earning $400,000 both pay exactly 4.95% of their taxable income. The person earning $400,000 obviously pays more in total dollars ($19,800 vs $1,980), but the percentage is identical.
| Gross Income | IL Taxable Income | IL State Tax (4.95%) |
|---|---|---|
| $40,000 | $40,000 | $1,980 |
| $65,000 | $65,000 | $3,218 |
| $85,000 | $85,000 | $4,208 |
| $120,000 | $120,000 | $5,940 |
| $200,000 | $200,000 | $9,900 |
Illinois Deductions and Adjustments
Illinois does not have a standard deduction or personal exemptions. Your starting point for Illinois tax is your federal adjusted gross income (AGI), which is then modified by Illinois-specific additions and subtractions.
Key Illinois subtractions (which reduce taxable income) include all federally taxable retirement and Social Security income, contributions to Illinois 529 college savings plans (up to $10,000 per individual or $20,000 per couple), interest from U.S. government bonds, military pay for active duty members, and Illinois gambling winnings to the extent of gambling losses.
The retirement income exclusion is the most significant — it means that a retiree receiving $50,000 in pension income and $25,000 in Social Security would subtract the entire $75,000 from their Illinois taxable income. Combined with the federal standard deduction, many Illinois retirees owe little or no state tax.
Illinois Tax Credits
The Property Tax Credit equals 5% of property taxes paid on your principal residence. With Illinois property taxes averaging around 2.1% of home value, this credit provides meaningful relief. On a $300,000 home with $6,300 in property taxes, the credit saves $315.
The Illinois EITC is 20% of the federal Earned Income Tax Credit. It is fully refundable, meaning you receive the credit even if you owe no state tax. The Education Expense Credit provides 25% of qualifying K-12 education expenses up to $750 per family ($500 per family maximum credit). The K-12 Education Expense Credit covers tuition, book fees, and lab fees for children attending Illinois schools.
Effective Tax Rate Comparison
Because Illinois has a flat rate with no standard deduction, the effective rate is straightforward — it is essentially 4.95% for everyone (minus any credits). This compares to other flat-rate states as follows:
| State | Flat Rate | Tax on $75,000 Income |
|---|---|---|
| Illinois | 4.95% | $3,713 |
| Georgia | 5.49% | $3,462 (after $12K deduction) |
| Michigan | 4.25% | $3,188 |
| Pennsylvania | 3.07% | $2,303 |
| Indiana | 3.05% | $2,288 |
| Colorado | 4.40% | $3,300 |
Special Considerations
Chicago residents do not pay a separate city income tax (unlike NYC), but face additional sales taxes that push the combined rate above 10% in many areas. The total sales tax in Chicago is 10.25%, one of the highest in the nation.
Local taxes. Many Illinois municipalities and counties impose their own taxes on specific items like food and beverages, but there is no local income tax in Illinois — all income tax goes to the state.
Illinois SALT impact. Because Illinois has relatively high property taxes (averaging ~2.1%), the increased $40,000 SALT cap under the One Big Beautiful Bill Act benefits many Illinois homeowners. A homeowner paying $8,000 in property taxes and $4,950 in state income tax (on $100,000 income) has $12,950 in SALT deductions, fully deductible under the new cap.
Frequently Asked Questions
Illinois has a flat income tax rate of 4.95% on all taxable income. Every dollar of taxable income is taxed at the same rate regardless of how much you earn.
No. Illinois does not offer a standard deduction or personal exemptions for tax years after 2017. This means your entire Illinois-adjusted gross income is subject to the 4.95% flat rate.
No. Illinois does not tax most retirement income, including Social Security benefits, pension income, 401(k) distributions, IRA withdrawals, and annuity income. This makes Illinois one of the most tax-friendly states for retirees despite its relatively high flat rate.
Illinois offers a property tax credit equal to 5% of property taxes paid on your principal residence. If you paid $6,000 in property taxes, your credit would be $300. This credit directly reduces your state tax bill.
The Illinois EITC is 20% of the federal EITC. If your federal EITC is $4,000, your Illinois EITC would be $800. This credit is refundable.
As of 2026, the Illinois flat rate remains at 4.95%. A 2020 ballot measure to switch to a graduated (progressive) income tax was rejected by voters. Any future rate change would require either a new ballot measure or legislative action.