How Illinois State Income Tax Works (2026)
Illinois has one of the simpler state tax structures in the US: a single flat rate applied to all income. For 2026, that rate remains 4.95%, unchanged since 2017. Whether you earn $30,000 or $3 million, every dollar of taxable Illinois income is taxed at 4.95%.
This flat structure is enshrined in the Illinois Constitution. A 2020 ballot measure (the "Fair Tax" amendment) sought to change Illinois to a progressive tax with rates up to 7.99% on high earners — voters rejected it 53% to 47%.
Illinois Personal Exemption (Not a Standard Deduction)
Illinois does not have a standard deduction like the federal tax system. Instead, it offers a personal exemption:
- Base personal exemption (2026): $2,775 per filer
- Per dependent exemption: Additional $2,775
- Phase-out: Single filers with AGI over $250,000 lose the exemption; joint filers over $500,000
The exemption is much smaller than the federal standard deduction ($16,100 single in 2026), which is why Illinois state tax often appears higher per dollar of income than federal tax for low earners.
Illinois Retirement Income Exemption: A Major Tax Win
Illinois is one of the most retirement-friendly states for income tax. The state exempts virtually all retirement income from state taxation:
- Social Security benefits — Fully exempt
- Public pensions — Including teacher, state employee, federal pensions
- Private pensions — Including most employer-defined benefit plans
- 401(k) and IRA withdrawals — Including traditional IRA distributions in retirement
- Annuity income — Most annuity distributions exempt
For a retiree with $75,000 in pension and 401(k) income, this saves approximately $3,700/year in Illinois state tax versus states like California or New York that tax retirement income.
Illinois vs Other States: 2026 Comparison
| State | $100K Net Take-Home (Single) |
|---|---|
| Texas (no state tax) | ~$78,500 |
| Florida (no state tax) | ~$78,500 |
| Pennsylvania (3.07% flat) | ~$75,500 |
| Illinois (4.95% flat) | ~$73,400 |
| California (single, progressive) | ~$72,000 |
| NY State (not NYC) | ~$73,000 |
| NYC Resident | ~$69,500 |
The Hidden Cost: Illinois Property Tax
Illinois income tax (4.95%) looks manageable on paper, but the state has the 2nd-highest property tax in America at 2.08% average effective rate. For a $400,000 home, that's $8,320/year in property tax — nearly double the national average.
Chicago and Cook County are particularly expensive. Combined with Cook County's 10.25% sales tax (the highest in any major US city), Illinois residents face among the highest total tax burdens in the country.
Frequently Asked Questions
Illinois has a flat 4.95% state income tax rate for 2026 — meaning everyone pays the same percentage regardless of income level. Illinois does not use progressive tax brackets. The state constitution requires a flat tax, and a 2020 ballot measure to allow progressive brackets was rejected by voters.
No, Illinois does not have a standard deduction. However, Illinois offers a personal exemption of approximately $2,775 per filer plus $2,775 per dependent for 2026. This exemption phases out at higher income levels — single filers with AGI over $250,000 and joint filers over $500,000 lose the exemption entirely.
Illinois is one of the most retirement-friendly states for income tax: it exempts Social Security benefits, pension distributions (public AND private), 401(k)/IRA withdrawals, and most other retirement income from state tax. However, Illinois has the 2nd-highest property tax in the nation (2.08% average), which partially offsets retirement income tax benefits.
While Illinois income tax is moderate (4.95% flat), the state ranks among the highest in total tax burden due to: property tax (2.08%, 2nd highest in nation), Cook County sales tax (10.25% in Chicago — highest combined rate in major US cities), and high vehicle registration fees. A family earning $100K in Chicago can easily pay $20,000+ in combined state and local taxes.
Sources & Methodology
- Illinois Department of Revenue — 2026 withholding tables and personal exemption amounts
- 35 ILCS 5/201 — Illinois Income Tax Act
- IRS Publication 15-T (2026) — Federal withholding
- Illinois Constitution Article IX, Section 3 — Flat tax requirement
- SSA Fact Sheet 2026 — Social Security wage base $184,500
Calculator methodology reviewed by Benjamin Thomas, CPA, MST. Rates verified January 2026.