Illinois Income Tax Rate 2026

Illinois taxes individual income at a flat 4.95% in 2026. The rate has been 4.95% since July 1, 2017 and applies to every dollar of taxable income regardless of how much you earn. Corporations pay 7% plus a 2.5% personal property replacement tax. There is no local or municipal income tax anywhere in the state.

No. Illinois is a flat-tax state, so there is no bracket table to look up — someone earning $25,000 and someone earning $2.5 million are both taxed at 4.95%. The Illinois Constitution requires a non-graduated income tax; a 2020 ballot measure that would have permitted graduated rates was rejected by voters. The only element that varies with circumstances is the personal exemption allowance, which is a fixed dollar subtraction rather than a rate change.

The personal exemption allowance is $2,925 for 2026, up from $2,850 in 2025 and $2,775 in 2024. You may claim one for yourself, one for a spouse on a joint return and one for each dependent. An additional $1,000 exemption is available if you are 65 or older, and another $1,000 if you are legally blind. Each $2,925 exemption saves $144.79 of Illinois tax.

The income tax is 4.95%, but that is only one piece. The statewide sales tax base is 6.25%, and local add-ons push Chicago to 10.25% — among the highest in the country. Illinois property taxes are also among the highest nationally, averaging over 2% of home value in many counties. The gasoline tax and vehicle registration fees are similarly on the high side. For a wage earner, though, the number that appears on the pay stub is 4.95%.

It depends which tax you mean, and the answer genuinely flips. On income tax Illinois is mid-pack — the 4.95% flat rate is higher than Indiana's but well below the top rates in California, New York or Minnesota, and there is no city wage tax. On property tax Illinois is near the top nationally. On sales tax Chicago is among the highest in the country. And on retirement income Illinois is one of the most generous states in the union, taxing none of it.

No. Illinois subtracts federally taxed retirement income out of the state base on Line 5 of Form IL-1040: Social Security benefits, qualified employee plan distributions such as a 401(k) or 403(b), IRA and SEP withdrawals, government retirement plans and railroad retirement. A retiree living on $70,000 of pension and Social Security pays $0 in Illinois income tax on it. This is one of the strongest arguments for retiring in Illinois despite the property tax burden.

Illinois starts from your federal adjusted gross income, then applies state-specific additions and subtractions. Wages, salaries, tips, bonuses, self-employment profit, interest, dividends, capital gains, rental income, unemployment compensation and gambling winnings are all taxable. The main subtractions are retirement income, US Treasury interest, Illinois college savings plan contributions up to the annual limit, and military pay. Capital gains receive no preferential Illinois rate — they are taxed at the same 4.95%.

Form IL-1040 is due April 15, the same day as the federal return. Illinois grants an automatic six-month extension to file — no form required — but an extension to file is not an extension to pay, so any balance is still due in April to avoid interest and penalties. Refunds are usually issued within a few weeks for electronic returns; you can check status through MyTax Illinois or the Where's My Refund service.

Illinois has reciprocal agreements with Iowa, Kentucky, Michigan and Wisconsin. Working in one of those four means your employer should withhold Illinois tax, and you file only Form IL-1040. Working in a non-reciprocal state — Indiana or Missouri, for instance — means that state withholds its own tax and Illinois grants a credit on Schedule CR for tax paid to the other state, so the income is not taxed twice. Illinois residents are taxed on all income wherever earned; non-residents are taxed only on Illinois-source income and file Schedule NR.