The state of Illinois requires you to pay taxes if you’re a resident or nonresident that receives income from an Illinois source. The state income tax rates are 4.95%, and the sales tax rate is 1% for qualifying food drugs and medical appliances and 6.25% on general merchandise. State income tax rates receive relatively little attention compared with federal income taxes, but they can still put a large dent in your wallet. How large depends on the amount you earn, as well as where you live and work. Here’s how it works, and a list of state tax rates across the U.S.
- Illinois also has higher-than-average sales taxes and property taxes.
- Technically, you don’t have just one “tax bracket” – you pay all of the Illinois marginal tax rates from the lowest tax bracket to the tax bracket in which you earned your last dollar.
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High income earners earning over certain limits do not qualify for the personal exemption deduction though. The state income tax system in Illinois only has a single tax bracket. However, there are multiple tax brackets for federal income tax. This means that no matter how much money you make, you pay that same rate. Sales and property taxes in Illinois are among the highest in the nation. To learn more about how your state income tax rates work, visit the website of your state’s taxation and revenue department, or the Federation of Tax Administrators.
Illinois tax deductions
The Illinois State Tax Tables for 2023 displayed on this page are provided in support of the 2023 US Tax Calculator and the dedicated 2023 Illinois State Tax Calculator. We also provide State Tax Tables for each US State with supporting tax calculators and finance calculators tailored for each state. The state also boasts a diverse economy, with thriving industries ranging from agriculture to finance illinois income tax rate to technology. At the heart of this economy is the wage system, where workers earn their livelihood through regular paychecks. Yes, those little pieces of paper or electronic transactions that arrive every week or month, filling our pockets with the hard-earned fruits of our labor. Whether you work in Chicago, Rockford, or somewhere else, let’s take a look at how getting paid works here.
There are three types of residency statuses when it comes to Illinois state tax. They determine what portion of your income the state will tax. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. Here is a list of our partners and here’s how we make money. Localities can add as much as 4.75%, and the average combined rate is 8.82%, according to the Tax Foundation.
Illinois Property Tax
Illinois does not have tax brackets, so calculating your rate should be pretty simple. If you have a dollar or $1 billion that is subject to Illinois income tax, you owe 4.95% of that money to the state. By registering for a NerdWallet account, you’ll have access to our tax product in partnership with Column Tax for a flat rate of $50, credit score tracking, personalized recommendations, timely alerts, and more.
And some states apply their tax rates to taxable income, while others use adjusted gross income. The idea of not having to pay state income taxes could give you the urge to throw everything in a U-Haul and head for Dallas, but property taxes, sales taxes or other taxes and fees might be higher in those states. When calculating your Illinois income tax, keep in mind that the Illinois state income tax brackets are only applied to your adjusted gross income (AGI) after you have made any qualifying deductions. These tax rates and bracket ranges apply to income earned in 2022, which is reported on tax returns filed in 2023. When it comes time to file your taxes, you’ll see that a state standard deduction exists in the form of a personal exemption and varies based on your filing status and income.
Tax Year 2022 Illinois Income Tax Brackets
Illinois offers a homestead exemption up to a maximum of $10,000 in Cook County and $6,000 in all other counties. You must own the property and use it as your principal dwelling place. The exemption varies for others, such as persons with disabilities and veterans; read more here. Helping you better invest both your time and resources with helpful info in lifestyle areas including personal finance and tech so that you can elevate your inner potential and achieve the best you. If this applies to you, you should be aware of Form IL-W-5-NR. You can file this form with your employer to request that no Illinois tax be withheld from your paycheck.
- The Personal Exemption, which is supported by the Illinois income tax, is an additional deduction you can take if you (and not someone else) are primarily responsible for your own living expenses.
- Remember that Illinois may have very different deduction laws from the Federal Income Tax, so you may have to write a whole new list of deductions for your Illinois income tax return.
- And some states apply their tax rates to taxable income, while others use adjusted gross income.
Illinois state taxes are high in some areas and low in others. The state has one of the highest sales tax rates in the U.S. As simple as Illinois tries to make income tax, the state seems to take the opposite approach with sales taxes.
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