Illinois State Tax Guide

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.

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.

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%.