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.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
[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.
Related Content
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.
- Kate SchubelTax Writer
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)
Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ Pockets
Tax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's Finances
Tax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
Why Your Summer Budget Feels Tighter: Tariffs Push Up Inflation
Tariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
-
Alabama Tax-Free Weekend 2025
Tax Holiday Here’s everything you need to know about the 2025 back-to-school Alabama sales tax holiday.
-
Key 2025 Tax Changes for Parents in Trump's Megabill
Tax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
‘I Play Pickleball in Retirement.’ Is It HSA-Eligible?
Retirement Tax Staying active after you retire may be easier with these HSA expenses. But there’s a big catch.
-
Mississippi Tax-Free Weekend 2025
Tax Holiday Just in time for Prime Day, Mississippi celebrated a tax holiday in July. Find out what back-to-school essentials were included.