Bottom Line
Middle-Class Families: Least Tax-Friendly (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Least Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)
At first blush, the state's 4.95% flat income tax rate doesn't seem that steep when compared to other states' top tax rates. And that's true if you're talking about wealthy residents. But for many taxpayers, the income tax rate is on the high end.
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Residents of the Land of Lincoln also get no relief when it comes to property taxes. The statewide median property tax rate in Illinois is the second-highest in the nation.
Sales tax rates are high in Illinois, too. The state has the eighth-highest average combined state and local sales tax rate at 8.81%. Illinois also has an estate tax, which can be bad news for your heirs.
On the bright side, Illinois is sending two tax rebates in 2022 to qualified residents – one for income taxes and one for property taxes. The state started sending rebate payments in September, but it's expected to take a few months before all payments arrive in residents' hands.
Illinois Income Taxes
Illinois Income Tax Range
Illinois has a flat rate of 4.95% of federal adjusted gross income after modifications.
Illinois Taxation of Social Security Benefits
Social Security benefits are not taxed by the state.
Illinois Tax Breaks for Other Retirement Income
Income from most retirement plans is exempt, including payments from qualified employee benefit plans (including 401(k) plans and traditional pensions), government retirement plans, military pensions, and IRAs.
Railroad Retirement benefits are also exempt.
Illinois Sales Tax
6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.81%, according to the Tax Foundation.
- Groceries: Taxable (1% state rate; additional local taxes may apply)
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Taxable (1% state rate; additional local taxes may apply)
NOTE: The state tax on groceries is suspended from July 1, 2022, to June 30, 2023.
Illinois Real Property Taxes
In Illinois, the median property tax rate is $2,241 per $100,000 of assessed home value.
Illinois Property Tax Breaks for Retirees
Illinois residents who are at least 65 years old are eligible for a homestead exemption of up to $5,000 ($8,000 in Cook County and, starting in 2023, bordering counties).
Seniors with household income of $65,000 or less can get their property's assessed value frozen.
In addition, 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.
A city, village or incorporated town can also refund property taxes paid by certain residents who are at least 65 years old.
Illinois Motor Fuel Taxes
Gasoline: 59.60¢ per gallon (varies by location).
Diesel: 67.02¢ per gallon.
Illinois Sin Taxes
Cigarettes and little cigars: $2.98 per pack (Cook County has an additional tax of $3, and three localities in Cook County add to that)
Snuff: $0.30 per ounce
Other tobacco products: 36% of the wholesale price
Vapor products: 15% of wholesale price; localities have additional taxes
Beer: $0.23 per gallon
Wine: $1.39 per gallon
Liquor: $8.55 per gallon
Marijuana: 10% of purchase price for marijuana at or below 35% THC, 25% for marijuana with THC greater than 35%, and 20% for cannabis-infused edibles, topical and inhalation products
Illinois Estate and Inheritance Taxes
Illinois has an estate tax with a $4 million exemption. Estate tax rates are from 0.8% to 16%.
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