Illinois State Tax Guide

Illinois state tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact residents.

Illinois flag flying in the sky for Illinois state tax story
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Illinois state taxes are high in some areas and low in others. The state has one of the highest sales tax rates in the U.S. 

Income tax rates might provide relief for people with higher incomes but could burden some taxpayers who earn less.

Illinois also has high property taxes when compared with the rest of the country, but at least there is no personal property tax in Illinois.

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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 State Tax: Income Taxes

Illinois income tax is fairly simple since taxpayers pay the same rate regardless of filing of status or income level. Though it is simple, taxpayers with lower incomes pay a higher tax rate than they would in many other states.

Illinois tax on retirement benefits: 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 Income Tax Range: All filers

Illinois has a flat income tax rate of 4.95% of federal adjusted gross income after modifications. 

This flat tax rate makes Illinois favorable for taxpayers with higher incomes. In other states, high-earners can pay more than double in income taxes.

Illinois Sales Tax

Illinois has a 6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.82%, according to the Tax Foundation.

There is more bad news. Residents of Illinois must pay sales tax on items that are tax-exempt in some other states.

  • Groceries are taxed at a reduced rate of 1%, but local taxes might apply (The 1% grocery tax is suspended until June 30, 2023)
  • Clothing is taxable.
  • Prescription drugs are taxable at a reduced rate of 1%.

How Much Are Property Taxes in Illinois?

In Illinois, the average effective property tax rate is 2.23%, which is one of the highest rates in the country. However, Illinois offers property tax breaks for some retirees.

Illinois Property Tax Breaks for Retirees

Senior Citizens Homestead Exemption: Adults 65 or older might qualify for a property tax exemption of $5,000 of a property's assessed value ($8,000 in Cook County). Illinois offers other types of homestead exemptions to some people younger than 65 too, but exemption amounts may differ.

  • Homestead Improvement Exemption
  • Natural Disaster Homestead Exemption
  • General Homestead Exemption
  • Homestead Exemption for Persons with Disabilities
  • Returning Veterans' Homestead Exemption

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.

Senior Citizens 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 Motor Vehicle Taxes

Motor vehicle purchases are subject to Illinois sales tax.

The per gallon tax on gasoline is $0.454 (effective from July 1, 2023 through December 31, 2023).

Illinois Sin Taxes

Swipe to scroll horizontally
Cigarettes and little cigars$1.98 per pack
Snuff$0.30 per ounce
Other tobacco products36% of wholesale price
Vapor products15% of wholesale price
Beer$0.23 per gallon
Wine$1.39 per gallon
Liquor$8.55 per gallon
Marijuana (Cannabis infused products)20% of purchase price
Marijuana (non-infused products with THC levels of 35 or below)10% of purchase price
Marijuana (non-infused products with THC levels above 35)25% of purchase price

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.

Katelyn Washington
Tax Writer

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.

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