Illinois Income Tax: Rates, Calculations, and Filing Guide

A student, you are not exempt from tax nor are there special residency provisions for you. However, income, such as certain scholarships or fellowships, that is not taxable under federal income tax law, is also not taxed by Illinois. An Illinois resident who worked in Iowa, Kentucky, Michigan, or Wisconsin, you must file Form IL-1040 and include as Illinois income any compensation you received from an employer in these states. Compensation paid to Illinois residents working in these states is taxed by Illinois. gym bookkeeping Based on reciprocal agreements between Illinois and these states, these states do not tax the compensation of Illinois residents. According to the Tax Foundation, the average effective property tax rate in Illinois is 1.83%, which is one of the highest rates in the country.

Federal Tax Impact

Use the Tax Rate Database to determine the corporation income and replacement tax rates. Illinois does not tax Social Security benefits, pensions, or 401(k)/IRA withdrawals. However, federal taxes may still apply to a portion of your retirement income.

• Below is a table of the general merchandise sales tax rates for all of the counties in Illinois.
• If your state tax witholdings are greater then the amount of income tax you owe the state of Illinois, you will receive an income tax refund check from the government to make up the difference.
• In addition, Illinois has what is called an exemption allowance, which is a set amount that most people who earned a paycheck can knock off their taxable income.
• Illinois might not be the first state that comes to mind when you think of high taxes, but it ranks near the top in several areas.
• SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you.
• The flat income tax rate remains at 4.95%, and there are still no tax brackets.

Integrated Tax Rates on Corporate Income in Europe, 2025

This means eligible taxpayers will receive a larger tax break on their individual income tax if they qualify for the federal credit. If you were an Illinois resident for any part of 2024 and earned income, you’re state income tax illinois required to file a state tax return. Non-residents who earned income from Illinois sources may also need to file. Determining your residency status and income sources is crucial to understanding your filing obligations. Filing your Illinois state tax return, which may include considerations for sales tax and estate tax, can be a daunting task, especially with the ever-evolving landscape of tax laws and regulations. This guide is designed to simplify the process for the 2025 tax season, offering you the latest updates, essential deadlines, and practical tips to ensure a smooth and successful filing experience.

Where’s My Refund?

• If your employer in any of these states withheld that state’s tax from your compensation, you may file the correct form with that state to claim a refund.
• However, tax policy is always a topic of discussion in the state legislature.
• Connect with a TurboTax expert for personalized tax advice or to handle filing for you.
• However, certain types of retirement income (e.g., pension, Social Security, railroad retirement, governmental deferred compensation) may be subtracted from your Illinois income.
• You are an Illinois resident if you were domiciled in Illinois for the entire tax year.

There is, however, a convenience fee for the use of a credit or debit card when paying your taxes. Always verify with official forms or a qualified tax professional. Pay electronically via the MyTax Illinois payment portal, including estimated payments and balance-due.

Contractor Calculators

Supplemental wages are taxed at the same rate as regular income in Illinois. See the  Illinois bookkeeping Department of Revenue Income Tax Credit and Expiration list for information about income tax credits. A retired Illinois resident who filed a federal return, you must file Form IL-1040. However, certain types of retirement income (e.g., pension, Social Security, railroad retirement, governmental deferred compensation) may be subtracted from your Illinois income. For more information, see the instructions for Line 5 and Publication 120, Retirement Income. Once approved, participants must file all missing returns, pay tax and interest, and remain compliant going forward.

Illinois Salary Tax Calculator for the Tax Year 2025/26

However, lower-income earners may face a heavier relative tax burden compared to a state with multiple tax brackets that could lower their effective tax rate. Thus, understanding the implications of income levels is crucial for all taxpayers in Illinois. For businesses, understanding tax implications can guide strategic decisions related to revenue and expenses.