Illinois has a flat state income tax of 4.95 percent on most income
Yes, Illinois has a state income tax. Unlike some states that tax only certain types of income or have no income tax at all, Illinois taxes wages, salaries, interest, dividends, and most other forms of personal income at a single rate: 4.95 percent. This rate applies to all residents and has been in place since 2017.
The tax is withheld from paychecks by employers, similar to federal income tax. If you work in Illinois or live there, you will see this deduction on your pay stub unless you have claimed exemptions or your income falls below the filing threshold.
Illinois does not offer a standard deduction the way the federal government does. Instead, the state uses a personal exemption — a fixed dollar amount subtracted from your income before the 4.95 percent rate is applied. For the 2024 tax year, the personal exemption is $2,575 per person. Married couples filing jointly can claim two exemptions.
Key Takeaways
- Illinois taxes income at a flat rate of 4.95 percent, applied to wages, investment income, and most other personal income sources.
- Your employer withholds Illinois income tax from your paycheck automatically unless you have filed an exemption certificate.
- The state personal exemption for 2024 is $2,575 per person, which reduces the income subject to the 4.95 percent tax.
- Certain types of income — including Social Security benefits, retirement account distributions under specific conditions, and some pension income — may be partially or fully exempt from Illinois tax.
Who must file an Illinois state income tax return
You must file an Illinois state income tax return if your income exceeds the filing threshold for your situation. For 2024, a single person with gross income of $2,575 or more must file. A married couple filing jointly must file if their combined income is $5,150 or more. These thresholds match the personal exemption amount.
Even if your income falls below the threshold, you may want to file if you had Illinois income tax withheld from your paychecks. Filing allows you to claim a refund of any overpayment. You can file using the Illinois Department of Revenue's online system or by mail using Form IL-1040.
Types of income taxed and exempt in Illinois
Illinois taxes wages, salaries, bonuses, tips, self-employment income, interest, dividends, capital gains, rental income, and income from partnerships and S corporations. The 4.95 percent rate applies to all of these at the same level.
Some income is partially or fully exempt. Social Security benefits are not taxed by Illinois. Distributions from may have access to retirement accounts — including traditional IRAs and 401(k)s — are generally taxed as ordinary income, but Illinois offers a pension exemption for certain retirees. If you are 67 or older and receive income from a may have access to pension, annuity, or retirement account, you may exclude up to $20,000 of that income from taxation. Military pensions are also exempt.
Income from municipal bonds issued in Illinois is exempt from state tax. Income from bonds issued outside Illinois is taxable.
How Illinois income tax withholding works
Your employer calculates how much Illinois income tax to withhold based on the information you provide on Form IL-W-4, the Illinois withholding certificate. This form asks for your filing status, number of dependents, and whether you claim exemptions. You submit it to your employer's payroll department, and they use it to determine your withholding amount each pay period.
If you do not submit a Form IL-W-4, your employer will withhold based on your federal W-4 information or will withhold at the highest rate. You can update your withholding at any time by submitting a new form to your employer.
If you have multiple jobs, you can adjust your withholding on each Form IL-W-4 to avoid overpaying or underpaying across all your income sources. Some people claim exemptions from withholding if their income is below the filing threshold, though this must be renewed annually.
Filing your Illinois state income tax return
Illinois residents file using Form IL-1040, the Illinois Individual Income Tax Return. You can file online through the Illinois Department of Revenue website, by mail, or through a tax preparation service. The filing important date is typically April 15, the same as the federal important date, though you can request an extension.
When you file, you report your total income for the year, claim your personal exemption, and calculate the tax owed. If your employer withheld more than you owe, you receive a refund. If you withheld less, you owe the difference. You can claim a refund electronically or by check, depending on how you file.
If you lived in Illinois for only part of the year, you file a part-year resident return and calculate your tax based on the income earned while you were a resident. If you moved to another state, you may owe tax only on income earned while you lived in Illinois.
Comparison of Illinois income tax to other states
Illinois has a lower flat tax rate than some states but higher than others. The following table shows how Illinois compares to neighboring states and a few others:
| State | Income Tax Rate | Type |
|---|---|---|
| Illinois | 4.95% | Flat |
| Indiana | 3.23% | Flat |
| Iowa | 3.63% to 6.5% | Progressive |
| Michigan | 4.25% | Flat |
| Missouri | 5.3% | Flat |
| Wisconsin | 3.54% to 7.65% | Progressive |
| Texas | None | No income tax |
| Florida | None | No income tax |
Illinois uses a flat rate, meaning everyone pays the same percentage regardless of income level. States like Iowa and Wisconsin use progressive rates, where higher earners pay a higher percentage. Some states, including Texas and Florida, have no state income tax at all.
Frequently Asked Questions
Do I owe Illinois income tax if I work in Illinois but live in another state?
Yes. Illinois taxes income earned within the state, regardless of where you live. If you work in Illinois and live in another state, you owe Illinois tax on your Illinois wages. You may also owe tax to your home state, depending on its rules. Some states offer credits to avoid double taxation, so check your home state's requirements.
Is retirement income from a 401(k) or IRA taxed by Illinois?
Yes, distributions from traditional 401(k)s and IRAs are taxed as ordinary income at the 4.95 percent rate. However, if you are 67 or older, you can exclude up to $20,000 of retirement account income from taxation. Roth IRA distributions are generally not taxed. Military pensions are fully exempt regardless of age.
What happens if I did not have enough tax withheld during the year?
When you file your return, you will owe the difference between the tax you withheld and the tax you actually owe. You can pay this amount when you file. To avoid this in future years, you can adjust your Form IL-W-4 with your employer to increase your withholding.
Can I claim dependents on my Illinois return?
No. Illinois does not allow dependent exemptions on the state return. You can only claim the personal exemption for yourself. However, you can claim dependents on your federal return, which may affect your federal withholding and refund.
Do I have to file if I am retired and only receive Social Security?
No. Social Security benefits are not taxed by Illinois, and if Social Security is your only income, you do not have to file a state return. However, if you have other income — such as a pension, investment income, or part-time work — you must file if that income exceeds the filing threshold.