Calculating your taxes is no simple task… especially if you live in one of the least friendly tax states in the country. We’re sorry to be the bearer of bad news Illinoisians, but the Prairie State has one of the most complex tax systems in the U.S., as well as some of the heaviest taxes overall.
If you’re feeling disheartened at these statistics, head over to our Illinois state income tax calculator to bring some context to the numbers on your W-2 Form. Our resources and tax professionals are here to help you crunch the numbers, file in compliance, and save as much as possible on your annual state tax return.
Overview of Illinois State Taxes
Before we start decoding Illinois state tax laws, let’s first establish some basic tax knowledge. If you’ve filed your own taxes before, you probably noticed that you had to file two separate returns—one for the federal government and one for the state in which you live.
This is because federal and state taxes are totally separate entities. Federal taxes are imposed on every taxpayer in the U.S. by the IRS; this means each taxpayer is subject to the same tax rates and regulations, no matter which of the 50 states they live in.
State taxes, on the other hand, are left up to state governments to control and collect. This means that state tax rates change from state to state. So Illinois taxpayers may have to pay a higher income tax when they file their return than a resident of Alaska, where no income tax is levied. The same thing goes for other state-regulated tax code such as sales tax, excise tax, and state-specific credits and deductions.
What does "state tax" mean in Illinois?
Like we mentioned earlier, Illinois has a relatively complex tax code. This means varying sales taxes in different cities, increased excise taxes in certain counties, and a host of other complications that make filing taxes in Illinois a bit of a hassle (to say the least).
Illinois State Taxes: Quick Facts
Income tax: 4.95%
Sales tax: 6.25%
Property tax: 1.95%
But if you’re wondering “how much is Illinois state tax?”, you’re in the right place. Refer to our quick facts section below for Illinois tax rates at a glance, or read end-to-end for a comprehensive perspective on state taxes in Illinois.
Annual 2019 Tax Burden ($75,000/yr income)
Total Estimated Tax Burden
Remaining Income = $65,136
Illinois Tax Brackets
The state of Illinois uses a single tax bracket system to impose state income taxes. This means that no matter what your income is, you’ll be expected to pay the standard 4.95% income tax rate. That said, there are a few opportunities to reduce your tax bill by claiming certain deductions and credits offered by the state (more on that in a moment).
Note: The rate of inflation from July 1, 2017, through June 30, 2018, was 3.9%; the 2018 Illinois tax brackets are indexed by this amount.
Single Tax Brackets
Married Filing Jointly Tax Brackets
Self-employment taxes in Illinois
If you’re a self-employed Illinois resident, your income will be taxed at the same rate as regular income (4.95%). However, you may have to make quarterly estimated tax payments to the state since your state taxes are not withheld from each paycheck by an employer.
In addition to your state self-employment tax responsibilities, you are also liable for the federal self-employment (SE) tax rate of 15.3%, which includes your Social Security and Medicare tax contributions.
Illinois Personal Income Tax
Since Illinois uses a single bracket system to impose income taxes, each taxpayer in the state can count on paying the Illinois state income tax rate of 4.95% of their adjusted gross income (AGI) when they file their state tax return.
Keep in mind, Illinois taxpayers: this rate is in addition to your federal income tax liability. Your federal income tax rate depends on which of the seven tax brackets your income is categorized under; federal income tax rates range from 10-37%.
Illinois Capital Gains Tax
The capital gains tax is similar to personal income tax, though it only refers to profit earned from the sale of a capital asset such as a business, stock, or collectible item. Capital gains can be taxed by both the federal and state governments.
The federal government taxes capital gains between 0-15%, depending on which bracket the taxpayer is in and how long the asset was held. As for capital sold in Illinois, taxpayers will be taxed at a rate of 5% of the profit earned.
Illinois State Sales Tax
The sales tax rate for Illinois is 6.25% on general merchandise and 1.00% on qualifying foods, drugs, and medical appliances. However, some areas in Illinois may impose sales tax that’s higher than the state’s 6.25% rate. Chicago (Cook County) for example, charges a whopping 10.25% sales tax on general merchandise; whereas neighboring Evanston (Cook County) taxes general merchandise at 10.00%.
If you’ve ever made a purchase outside of Alaska, Oregon, Delaware, Montana, or New Hampshire, you’re probably pretty familiar with sales tax. You know… that extra change that’s added onto the listed sales price of an item when you cash out at the register (sigh).
Paying sales tax can definitely put a damper on your shopping budget, but the revenue is used to fund important government expenditures such as education, road maintenance, and first responder services.
Sales taxes are handled by state and local governments who determine what items are taxable and at what rate. Sales tax can either be imposed on the seller of the item or the consumer, depending on how the state chooses to structure their sales tax system.
Combined rate ending June 30, 2019
Antioch (Lake County)
Berwyn (Cook County)
Cairo (Alexander County)
Dakota (Stephenson County)
Elburn (Kane County)
Frankfort (Cook County)
Frankfort (Will County)
Grafton (Jersey County)
Highland (Madison County)
Lake Forest (Lake County)
Lemont (Cook County)
Lemont (Dupage County)
Lemont (Will County)
Lincolnwood (Cook County)
McHenry (McHenry County)
Milan (Rock Island County)
Milledgeville (Carroll County)
Princeton (Bureau County)
Romeoville (Will County)
Wood River (Madison County)
Illinois Excise Tax
What are excise taxes?
Excise taxes are considered an "indirect tax" charged to taxpayers by both the federal and state governments. They’re considered indirect because the tax is charged to the producer or vendor of the product, rather than the consumer.
However, taxpayers should note that excise taxes are generally reflected in the purchase price of the item. This means you may be paying a few dollars above the retail value of your six-pack in order to account for your state’s excise taxes.
Excise taxes can be imposed on a variety of goods and services such as telecommunications, tourism, and gas. Additionally, excise taxes are often used to deter consumers from engaging in activities that may be considered harmful to society, these are known as "sin taxes." Common examples of sin taxes include: alcohol, tobacco, marijuana, and gambling.
Alcohol excise tax in Illinois
Alcohol excise tax is one of the most common examples of the "sin tax." Each state can use their own discretion when it comes to taxing beer, wine, and spirits—which naturally means some states have higher rates than others.
As for Illinois alcohol excise taxes, here are the rates you can expect to be taxed on your favorite libations:
Beer and cider: - $0.231 per gallon
Liquor (<14% alcohol): - $1.93 per gallon
Liquor (14-20% alcohol): - $1.39 per gallon
Liquor (>20% alcohol): - $8.55 per gallon
How does Illinois’s alcohol excise tax compare to other states? Washington has the most expensive spirits tax in the nation at $32.52 per gallon, while Wyoming and New Hampshire price spirits are so low in their government-run liquor stores that spirits taxes are essentially nonexistent.
Tobacco excise tax in Illinois
The state of Illinois imposes a variety of sales and use taxes on both producers and individuals. See the table below to see how the cigarette excise tax will affect Illinois residents:
Cigarette use tax (individuals): 149 mills ($0.149) per cigarette or $2.98 per package of 20 cigarettes + 6.25% sales tax on purchase price
Cigarettes use tax (distributors): 149 mills per cigarette or $2.98 per package of 20 cigarettes
Cigarette machine operator’s occupation tax: 149 mills ($0.149) per cigarette made or fabricated in a cigarette machine operator’s cigarette machine
Cigarette tax: 149 mills ($0.149) per cigarette or $2.98 per package of 20 cigarettes
Gas tax in Illinois
Owning a gas-guzzling vehicle in Illinois may not have the same appeal when you compare state gas tax rates across the nation. Ranking for some of the nation’s highest gas taxes, Illinois recently approved a tax of 38 cents per gallon on gasoline sold in the state. To give you some context, Alaska has the lowest gas tax rate in the U.S. at 14.7 cents per gallon—is Chicago really that much warmer than Anchorage? Tempting, isn’t it?
Hotel operator’s occupation tax in Illinois
If you operated or stayed in a hotel in Illinois this year, you can expect to pay at least one of the state’s various hotel operator’s occupation tax. This tax is imposed on hotels that rent or lease rooms to individuals for 30 consecutive days or less. On top of the state rate, hotels in Chicago are also subject to a number of other taxes in order to do business in the Windy City.
The hotel operator’s occupation tax in Illinois is as follows:
State hotel tax rate: 6% of 94% of gross receipts
Illinois Sports Facilities Authority hotel tax: 2% of 98% tax on gross receipts in Chicago
Metropolitan Pier and Exposition Authority hotel tax: 2.5% of gross charges from hotel operators in Chicago
Municipal hotel tax: 1% of 99% tax on gross receipts from hotel operators in Chicago
Illinois Insurance Tax
The insurance premiums tax rate in Illinois is 0.4% of health premiums. Insurance companies offering coverage in the United States are subject to a premium tax on their gross premiums paid. Each state has its own rate, which is typically reflected in the insurance costs to the consumer.
Illinois State Property Tax
Illinois is famous for the Bears, Abraham Lincoln, deep dish pizza, and jazz—but there’s one other thing the state’s known for that’s not so popular—high property taxes. Illinois ranks top five in the nation for highest property taxes at an average rate of 2.22%.
But remember when we said Illinois had some special tax code to consider? Here’s one place where it comes into play:
State property taxes also depend on the county in which the property is located. For some counties in the Land of Lincoln, property tax averages reach well above 3%. Bureau County for example, imposes a 3.31% tax rate on property owners in the area.
Other counties in the state take a less aggressive approach on Illinois state property taxes—like Stephenson County which has an effective tax rate of 2.18%. If you’re thinking about buying real estate in Illinois, you may want to consider how property rates impact your desired neighborhood beforehand. Based on the median home price in Illinois ($173,800), the average property taxes collected is $3,995.
Illinois Inheritance and Estate Taxes
If you inherited money or property from a deceased loved one after July 1, 2017, in Illinois, your assets will be subject to a two-part inheritance/estate tax, depending on what assets you’ve acquired.
Income Tax: Trusts and estates are both taxed at the regular income tax rate of 4.95%
Personal Property Replacement Tax: In addition, trusts must also pay a replacement tax of 1.5%, but estates do not have to worry about paying it.
Illinois State Tax Credits
Tax credits are leveraged by both the federal and state government as a way to help taxpayers limit their tax liabilities by meeting certain criteria, or by participating in government-supported activities like investing in green energy, for example. Tax credits lower a taxpayer’s tax bill dollar for dollar; so if you received a tax credit for $500 for installing solar panels at your home, your tax bill would be reduced by $500.
The state of Illinois has four active tax credits that individual taxpayers may be able to qualify for (with the proper paperwork and criteria, of course).
Earned income tax credit (EITC)
The earned income tax credit (EITC) is offered by the federal government and many state governments, Illinois included. EITC benefits low to moderate-income taxpayers by reducing their taxes owed, sometimes resulting in a tax refund if the tax credit exceeds their tax liability.
According to the Illinois Department of Revenue, taxpayers will generally be approved for the Illinois earned income tax credit if they are approved for the federal one. If approved, the Illinois EITC is 18% of the value of your federal EITC. So if you received a $2,000 credit for the federal EITC, you would be eligible for a credit up to $360 with the state of Illinois.
Education expense credit
If you’re the parent or guardian of a full-time student in the state of Illinois, you may be able to offset some of their school expenses by claiming the state’s education expense credit. In order to qualify for this tax credit, you must meet the following standards:
You were the parent or legal guardian of a full-time student who was under age 21 at the end of the school year
You and your student were both residents of Illinois when you paid the educational expenses
Your student attended kindergarten through 12th grade at a school in Illinois during the respective tax year
Invest in Kids credit
In 2017, the state of Illinois established the Invest in Kids tax credit which rewards qualifying donors with a 75% income tax credit for contributing to the program’s scholarship fund.
Property tax credit
The Illinois property tax credit (5% of Illinois property tax) is available to qualifying property owners that meet the following requirements:
The property must act as your principal residence during the relative tax year
You owned the residence and paid property tax on it
Does Illinois have a standard deduction for individual tax filers?
No, but if you can claim yourself on your tax return you will be allowed a $2,175 exemption. If someone else claims you as a dependent, you are not entitled to the $2,175 exemption unless your Illinois base income is less than $2,175.
Illinois State Tax Exemptions
If you can claim yourself...
If someone else claims you as a dependent...
No exemption unless your base income is less than $2,175
State tax deductions are similar to tax credits in that they work to reduce the amount of taxes a taxpayer is subject to pay. But, unlike how tax credits reduce the actual tax bill, tax deductions reduce the taxpayer’s taxable income which in turn, could lower the amount of taxes they’ll be required to pay.
In 2018, the state of Illinois offered 19 state tax deductions on reflect this, ranging from tax deductible military pay deductions for paying into a life insurance plan.
Here are a few of the most notable tax deductions you may be able to claim on your next tax return in Illinois:
Ridesharing money and other benefits
Payment of life insurance, endowment, or annuity benefits received
Reparations or other amounts received as a victim of persecution by Nazi Germany
Military pay earned
Contributions made to the “Bright Start,” “Bright Directions,” or “College Illinois” college savings programs
Calculating Your Illinois Tax Refund
Trying to estimate your money back on your Illinois tax refund? Take advantage of our Illinois tax calculator to help you budget for your state tax dues, and determine whether or not you’ll be receiving a refund check from the state.
Using our tax calculator is simple—just gather the following information and you’re ready to go:
Number of exemptions
Number of dependents
List of tax credits or deductions you qualify for
Once you’ve estimated your taxes using our state-specific tax calculator, follow these filing tips to ensure you’re following best tax practices!
If you want to have more money taken out of your paycheck in hopes of receiving a bigger tax return, claim “0” allowances on your W-4 form (this can be updated with your employer for the following tax season).
Note: more taxes taken out of your paycheck means less money each pay period, but potentially more money on your annual return.
When you receive your W-2 statement from your employer, be sure to double-check that your annual wages and withholdings are accurately reflected so that you can file your taxes correctly.
To help you save the most on your federal and state tax returns, review the tax credits and deductions you qualify for, and have supporting documents to back up your claim.
How to Pay Illinois Taxes
When it’s time to make your tax payment to the Illinois Department of Revenue, taxpayers have four payment methods to choose from:
Check or money order
Note: Estimated tax payments are due quarterly on April 15th, June 15th, September 15th, and January 15th. Payments can be made electronically to the Illinois Department of Revenue or by check or money order with completed reflect this.
Illinois imposes a 6.25% tax on the sale of candies in the form of bars, drops, or pieces such as Snickers, Lemon Heads, and Skittles. However, candies that require refrigeration or are made with flour, such as Twix, are exempt from the state’s candy sales tax.
Tax code changes could be on the horizon for Illinois taxpayers after Governor J.B. Pritzker proposed a major revamping of the state’s rates and structures. His proposed “Fair Tax” plan introduces five new tax brackets and some of the highest tax rates in the country.
Summary of Federal Taxes
Remember that Illinois state taxes are separate from federal state taxes, and that the Illinois tax brackets are different at a state level.
Summary of Federal Taxes
In addition to your Illinois state tax liabilities, you’re also responsible for fulfilling your federal tax duties by filing a federal tax return with the IRS. Thankfully, the federal tax code is the same no matter which state you live in, so the process is a little bit more straightforward than calculating your state taxes.
The important thing to note here is that filing your federal income taxes in accordance with IRS standards is extremely important. So, no matter how confident you are in your math skills and tax knowledge, it can be useful to have a tax professional on your side to help you estimate your tax dues, strategize your tax savings, and file your return.
This information is current as of 2019. Taxpayers should consider special circumstances which could impact their individual state tax return.
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