Illinois Income Tax Guide 2026

Look, I've lived in Illinois for going on fifteen years now, and if there's one thing I've learned, it's this: the income tax isn't what'll get you. It's the property tax bill that shows up every six months and makes you question every life decision that led you to buy a house in this state.

But we'll get to that. Let's start with the income tax since that's why you're here.

The Flat Tax — 4.95% Across the Board

Illinois doesn't do brackets. We don't do progressive. We do flat. The 2026 individual income tax rate is 4.95%, and that's it. End of story. Whether you're pulling in $30,000 or $3 million, you pay the same rate. It's almost refreshing in its simplicity — though, yeah, it also means the person making $30k is paying the same percentage as the person making $3 million, which... you can have your own feelings about that.

(We actually voted on switching to a progressive system back in 2020. The ballot measure failed. Badly. Like, 53% to 47% badly. Illinoisans apparently prefer the devil they know.)

Personal Exemptions

Okay, it's not a total flat percentage on everything. You do get some exemptions knocked off your income first:

• Single: $2,775
• Married filing jointly: $5,550
• Head of household: $2,775
• Each dependent: another $2,775

These come off the top before the 4.95% rate kicks in. So it's not much, but hey — it's something.

How the Math Actually Works

The calculation goes like this:

Start with your federal AGI. Then you add back some deductions that the feds let you take but Illinois doesn't (because of course). Then subtract your personal exemptions. Then multiply by 4.95%. Then subtract any credits.

Let me walk through a real example. Say you're single, making $80,000 in federal AGI:

• Take the $80,000, subtract your $2,775 personal exemption
• That gives you $77,225 in taxable income
• $77,225 times 4.95% = $3,822.64

That's it. No bracket gymnastics, no guessing. Just... math. Simple, predictable math. Our Illinois paycheck calculator does this for you automatically. I'll give Illinois that much.

But Then There's Property Tax (Ugh)

Here's where Illinois gets you. Our property taxes are the second-highest in the entire country — only New Jersey beats us, and honestly, who wants to lose to New Jersey at anything?

The average effective property tax rate in Illinois is around 2.08% of your home's value. That's not a typo. If you've got a $300,000 house, you're looking at roughly $6,240 a year in property taxes. Every year. Going up.

And Cook County? Don't even get me started. They use this classification system where residential properties get assessed at 10% of market value, but commercial properties are assessed at 25%. Which sounds fine until you realize that commercial property owners pass those costs right along to tenants, who pass them along to customers, and suddenly you're paying $8 for a sandwich in the Loop. Good lord.

My brother-in-law in Naperville pays something like $9,000 a year on a house worth roughly $400,000. He's not thrilled about it, in case you were wondering.

Sales Tax — Because Why Not

The state sales tax is 6.25%. That's the state part. But then the county adds their piece, and the city adds theirs, and before you know it:

• Chicago: 10.25% total. Yeah. Ten and a quarter percent.
• Suburbs: usually somewhere between 8.5% and 10%, depending on where exactly you are.

The one small mercy: groceries are taxed at just 1%, and prescription meds are exempt. So at least they're not taxing your insulin at 10%. (Though given everything else, give it time.)

How Do We Compare to the Neighbors?

This is the part that really stings. Our compare states tool lays it out side by side, but here are the highlights:

Indiana — 3.05% flat tax, 0.82% average property tax. Literally right next door and way cheaper on both fronts.

Wisconsin — Progressive rates from 3.50% to 7.65%, but their property tax averages 1.73%. If you're a high earner, Illinois might actually be better. If you're middle income? Wisconsin's looking pretty good.

Iowa — They're at 5.70% right now but phasing down to 3.9%. Property tax around 1.53%. Iowa's making moves, is what I'm saying.

Missouri — Top rate of 4.95% (same as Illinois!) but it's progressive, so you only hit that on higher income. Property tax at 0.97%. That's less than half of ours. Less than half!

Kentucky — 4.0% flat, 0.82% property tax. Ouch.

So yeah, our income tax is middling, but combine it with the property taxes and we're not looking great compared to the neighbors. Just being honest.

The One Big Win: Retirement Income

Here's where Illinois actually shines, and it's a big one. Illinois does not tax retirement income. At all. Social Security? Not taxed. Pensions? Not taxed. 401(k) distributions (try our 401(k) calculator to plan yours), IRA withdrawals — all untaxed at the state level.

If you're retired or close to it, that's genuinely huge. A retiree pulling $60,000 from a 401(k) in Illinois saves roughly $2,970 compared to a state that taxes it at 5%. And there are a lot of states that do.

Also worth noting — there's no local income tax in Illinois. Some states have city or county income taxes piled on top of the state tax. Not us. The 4.95% is the whole story on the income tax side.

Use our Illinois paycheck calculator to see your exact take-home pay after all Illinois taxes and deductions.