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Illinois Tax Guide: Flat 4.95% Income Tax

Understand Illinois' flat income tax, high property taxes, and available deductions for the 2025 tax year.

4.95%
Flat Income Tax Rate
8.83%
Combined Sales Tax
2.07%
Property Tax Rate
#6
Tax Burden Rank

Tax Overview

Illinois imposes a flat income tax rate of 4.95% on all taxable income, a rate that has been in place since 2017. The Illinois Constitution requires a flat rate structure, meaning all taxpayers pay the same percentage regardless of income level. A 2020 ballot measure to switch to a graduated tax system was rejected by voters, keeping the flat rate in place.

While the income tax rate is moderate, Illinois is notorious for its extremely high property taxes. The state has some of the highest property tax rates in the nation, with effective rates averaging around 2.07%. In some Chicago-area suburbs, rates can exceed 3%. This heavy reliance on property taxes to fund local schools and services is a frequent source of controversy and a key driver of out-migration from the state.

Sales tax in Illinois adds to the overall burden, with a state rate of 6.25% on general merchandise and combined rates that can exceed 10% in Chicago. However, groceries and medications are taxed at a reduced rate of 1%. The combination of moderate income taxes, high property taxes, and significant sales taxes gives Illinois one of the higher overall tax burdens in the Midwest.

Income Tax

Illinois constitutionally requires a flat income tax rate. A 2020 ballot measure to switch to graduated rates was rejected by voters.

Flat Tax Rate: 4.95%

Sales Tax

State Rate6.25%
Avg. Local Rate2.58%
Combined Rate8.83%

Property Tax

Effective Rate2.07%
Median Annual Bill$4,942

Key Deductions in Illinois

  • ✓Personal exemption of $2,625 per person
  • ✓Earned income tax credit (20% of federal EITC)
  • ✓Property tax credit (5% of property taxes paid on primary residence)
  • ✓Education expense credit (25% of qualifying K-12 expenses, up to $750)
  • ✓Retirement income subtraction for qualifying pension and retirement income
  • ✓Contributions to Illinois 529 Bright Start plan (up to $10,000 single)

Filing Information

Filing Deadline: April 15

Tax Authority: Illinois Department of Revenue

Phone: (800) 732-8866

Website: https://tax.illinois.gov

Frequently Asked Questions

Why are Illinois property taxes so high?
Illinois relies heavily on property taxes to fund local schools and municipal services. The state has nearly 7,000 local taxing districts, more than any other state, each adding to the property tax bill. Limited state funding for education pushes costs onto local property owners.
Does Illinois tax retirement income?
Illinois exempts most retirement income from state taxation, including Social Security benefits, pension income, 401(k) distributions, and IRA withdrawals. This makes Illinois more attractive for retirees despite its high property taxes.
Could Illinois ever switch to a progressive income tax?
The Illinois Constitution requires a flat income tax rate. Changing to a progressive system would require a constitutional amendment, which voters rejected in 2020. Any future attempt would need to go through the same amendment process.
Are groceries taxed in Illinois?
Groceries in Illinois are taxed at a reduced combined state rate of 1% (versus 6.25% for general merchandise). Local taxes may add additional amounts, but the reduced state rate provides meaningful savings on food purchases.

Neighboring State Guides

WisconsinIowaMissouriKentuckyIndiana

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