Illinois has a flat state income tax rate of 4.95% on all taxable income. The Illinois Constitution requires a flat tax rate, meaning all income is taxed at the same percentage regardless of how much you earn.
Illinois Flat Tax Rate
| Taxable Income | Tax Rate |
|---|---|
| All income | 4.95% |
Illinois voters rejected a constitutional amendment in 2020 that would have allowed a progressive tax. The flat rate remains in effect, based on Illinois Department of Revenue guidelines.
What You'll See on Your Paystub
An Illinois worker's paystub includes both federal income tax withholding and state deductions:
| Deduction | Rate | Notes |
|---|---|---|
| Federal Income Tax | Varies | Based on W-4 and income |
| Social Security | 6.2% | Up to $181,200 wage base |
| Medicare | 1.45% | No wage limit |
| Illinois State Income Tax | 4.95% | Flat rate on all taxable income |
Illinois Exemptions
Illinois provides personal exemptions that reduce your taxable income:
| Exemption Type | Amount (2026) |
|---|---|
| Personal Exemption | $2,625 |
| Spouse Exemption | $2,625 |
| Dependent Exemption | $2,625 each |
Illinois does not have a standard deduction like the federal system. Instead, it uses personal exemptions to reduce taxable income.
No Local Income Taxes
Illinois does not allow cities or counties to impose local income taxes. Your state withholding covers all Illinois income tax obligations.
Reciprocity Agreements
Illinois has income tax reciprocity agreements with neighboring states:
- Iowa: Illinois residents working in Iowa pay only Illinois tax
- Kentucky: Illinois residents working in Kentucky pay only Illinois tax
- Michigan: Illinois residents working in Michigan pay only Illinois tax
- Wisconsin: Illinois residents working in Wisconsin pay only Illinois tax
If you live in Illinois and work in Indiana, there is no reciprocity agreement. You'll need to file in both states and claim a credit for taxes paid to Indiana.
Chicago Area Workers
Special considerations for Chicago metro workers:
- No city income tax (unlike some other major cities)
- High concentration of employers in downtown Chicago and suburbs
- Many workers commute from Indiana or Wisconsin (check reciprocity rules)
- Cook County has higher sales taxes but no income tax surcharge
Retirement Income
Illinois is very retirement-friendly:
- Social Security benefits are fully exempt
- Pension income from qualified plans is fully exempt
- 401(k) and IRA distributions from qualified plans are exempt
- Military retirement pay is fully exempt
Illinois is one of the most tax-friendly states for retirees, with full exemptions for retirement income.
Illinois vs. Neighboring States
| State | Tax Structure | Rate |
|---|---|---|
| Illinois | Flat | 4.95% |
| Indiana | Flat | 3.05% |
| Wisconsin | Progressive | 7.65% |
| Iowa | Flat | 3.8% |
| Missouri | Progressive | 4.8% |
Comparing Take-Home Pay
Here's how a $75,000 annual salary in Illinois compares to other states:
| State | Effective Rate | Annual State Tax |
|---|---|---|
| Illinois | ~4.8% | ~$3,480 |
| Indiana | ~3.0% | ~$2,200 |
| Wisconsin | ~4.6% | ~$3,100 |