Income Tax

Income Tax in Illinois: Complete Guide 2026

Updated 2026-03-10

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Income Tax in Illinois: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Illinois imposes a flat individual income tax rate of ~4.95% on all taxable income, constitutionally mandated to be uniform. A 2020 ballot initiative to allow graduated rates was defeated by voters, cementing the flat tax structure for the foreseeable future. Illinois is notable for being one of the most retirement-friendly states in the country, exempting nearly all forms of retirement income from state taxation. The state’s high property taxes and sales taxes, however, mean that the total tax burden on Illinois residents often exceeds the national average.

Illinois Income Tax Rates (2026)

Tax ComponentRate
Individual income tax rate~4.95% (flat)
Personal exemption~$2,425 per person
Dependent exemption~$2,425 per dependent

Illinois does not have a standard deduction. Instead, taxpayers receive personal exemptions that reduce taxable income.

Estimated Tax by Income (Single Filer, One Exemption)

Gross IncomeExemptionTaxable IncomeApprox. Tax
~$30,000~$2,425~$27,575~$1,365
~$50,000~$2,425~$47,575~$2,355
~$75,000~$2,425~$72,575~$3,592
~$100,000~$2,425~$97,575~$4,830
~$150,000~$2,425~$147,575~$7,305

How Illinois Income Tax Works

Flat Rate on All Income

Illinois’s flat ~4.95% rate applies uniformly to all taxable income regardless of amount. The state constitution requires a single rate for all individual taxpayers (Article IX, Section 3). This means whether you earn ~$30,000 or ~$3,000,000, the same marginal rate applies to every dollar above exemptions.

Starting Point: Federal AGI

Illinois begins its income tax calculation with federal adjusted gross income, then applies Illinois-specific additions and subtractions. Key additions include federally exempt interest income from non-Illinois state and municipal bonds. Key subtractions include retirement income, Social Security benefits, and Illinois municipal bond interest.

No Standard Deduction

Unlike most states, Illinois does not offer a standard deduction or itemized deductions. The only reduction to taxable income is the personal exemption (~$2,425 per person). This makes the effective tax rate very close to the statutory rate for most taxpayers.

Retirement Income Exemption

Illinois exempts virtually all retirement income from state income tax:

  • Social Security benefits
  • Pension income (public and private)
  • 401(k) and 403(b) distributions
  • Traditional and Roth IRA distributions
  • Military retirement pay
  • Railroad Retirement benefits

This comprehensive exemption makes Illinois one of the top states for retirees from a state income tax perspective.

Credits and Other Provisions

  • Earned Income Credit (IL): Illinois offers a state earned income credit equal to ~20% of the federal EITC
  • Property Tax Credit: A credit equal to ~5% of property taxes paid on a primary residence
  • Education Expense Credit: A credit of up to ~$750 per family (~25% of qualified K—12 expenses up to ~$3,000) for children in grades K—12
  • Child Tax Credit (IL): Illinois provides a refundable credit for families with dependents under 12, with amounts varying by income

Comparison to Neighboring States

StateTop Income Tax RateStructureNotes
Illinois~4.95%FlatNo standard deduction
Indiana~3.05%FlatPlus county taxes
Iowa~5.70%GraduatedBeing reduced
Wisconsin~7.65%GraduatedHigher top rate
Missouri~4.80%GraduatedSlightly lower
Kentucky~4.00%FlatLower flat rate

Illinois’s flat rate is moderate within the region, though Indiana and Kentucky offer notably lower rates. Wisconsin’s top rate is significantly higher. However, Illinois’s lack of a standard deduction means the effective rate is higher than many states with similar statutory rates.

Tips for Minimizing Your Illinois Income Tax

  1. Plan for retirement income in Illinois — the state’s comprehensive exemption means your pension, 401(k), and IRA income will be tax-free, making Illinois excellent for retirement despite its reputation for high taxes.

  2. Claim the property tax credit of ~5% of property taxes paid. Given Illinois’s high property taxes (averaging over ~$5,000 annually), this credit can be worth ~$250 or more.

  3. Use the education expense credit if you have children in K—12. Up to ~$750 per family can reduce your tax bill.

  4. Claim the state earned income credit if you qualify for the federal EITC. The Illinois credit equals ~20% of your federal credit amount.

  5. Maximize pre-tax retirement contributions to reduce federal AGI and thus Illinois taxable income during your working years.

  6. Report Illinois municipal bond interest correctly — this income is exempt from Illinois tax and should be subtracted from your base.

Key Takeaways

  • Illinois imposes a flat income tax rate of ~4.95% with no standard deduction
  • Personal exemptions are ~$2,425 per person, the only reduction from taxable income
  • Nearly all retirement income is exempt, making Illinois very favorable for retirees
  • The property tax credit (~5% of property taxes paid) provides meaningful relief
  • Illinois’s rate is moderate regionally, though the lack of a standard deduction raises effective rates
  • The state earned income credit (~20% of federal EITC) benefits low-income workers

Next Steps