Illinois Tax Guide 2025
Explore Illinois's 2025 state tax rates for income, sales, property, retirement, and more. Learn how Illinois compares nationwide.
Kate Schubel
Illinois state tax: Overview
Illinois might not be the first state that comes to mind when you think of high taxes, but it ranks near the top in several areas. The state has one of the highest sales tax rates in the country, some of the steepest property taxes, and it taxes essentials like groceries, diapers, and prescription medications, which are often tax-free in other states.
Still, there is some good news. Illinois does not tax retirement income, which is a big plus for retirees. There is also no state personal property tax, so you will not be paying annual taxes on things like your car.
Read on to learn more about what to expect as a current or future Illinois taxpayer.
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[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, and the Sales Tax Handbook. Property taxes are cited as a rate percentage rather than the assessed value.]
Illinois income taxes
Illinois imposes a flat individual income tax rate of 4.95%.
Illinois income taxes in retirement: Income from most retirement plans is exempt, including payments from qualified employee benefit plans (401(k) plans and traditional pensions), government retirement plans, military pensions, and IRAs. Social Security benefits and Railroad Retirement benefits are also exempt from Illinois state income tax.
Illinois retirement taxes
Illinois is a state that exempts all retirement income. But there is an estate tax in Illinois, which has a $4 million exemption. Estates exceeding that value are taxed between 0.8% and 16%.
- Social Security: Not taxable
- Pensions: Not taxable
- 401k and IRA Distributions: Not taxable
Illinois sales tax
Illinois has a 6.25% state sales tax. Localities can add as much as 5.25%, and the average combined rate is 8.89%, according to the Tax Foundation.
Residents of Illinois must pay sales tax on items that are tax-exempt in some other states.
- Groceries: Taxable
- Diapers: Taxable
- Prescription: Taxable
- Clothing: Taxable
How much are property taxes in Illinois?
According to the Tax Foundation, the average effective property tax rate in Illinois is 1.83%, which is one of the highest rates in the country.
Illinois Property Tax Breaks for Retirees
Homestead Exemption: Adults 65 or older might qualify for a property tax exemption of up to $6,000 of a property's assessed value (up to $10,000 in Cook County and $8,000 in counties contiguous to Cook). Illinois offers other types of homestead exemptions to some people younger than 65 too, but exemption amounts may differ.
Assessment Freeze Homestead Exemption: Qualified adults 65 and older may have their property's assessed value frozen. To qualify for the freeze, household income must not exceed $65,000.
Real Estate Tax Deferral Program: Qualified residents age 65 or older with a household income of $65,000 or less can defer up to $7,500 in property tax payments.
Illinois gas tax
Gasoline | $0.19 per gallon |
Diesel | $0.22 per gallon |
Illinois taxes on alcohol and tobacco
Product | Tax amount |
|---|---|
Cigarettes | $1.98 per pack |
Other tobacco product taxes | 36% wholesale price |
Medical marijuana tax | 1.00% |
Recreational marijuana tax | 16.25% (6.25% Illinois cannabis sales tax + 10% state excise tax) |
Source: The Sales Tax Handbook
Product | Tax amount |
|---|---|
Beer | $0.23 per gallon |
Wine | $1.39 per gallon |
Liquor | $8.55 per gallon |
Source: The Sales Tax Handbook
Illinois estate and inheritance taxes
Illinois has an estate tax with a $4 million exemption. Estate tax rates range from 0.8% to 16%. There is no inheritance tax in Illinois.
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