According to proposed progressive income tax rates already passed by state lawmakers, that would take $2,482 in taxes from the average retiree annually. You can claim 5% of the real estate tax you paid on your principal residence on your Illinois tax return. You must own and live in the residence, and your income must be below $500,000 (married filing jointly) or $250,000 (all other filers) to be eligible for this tax credit. The five states with the highest average local sales tax rates are Alabama (5.29 percent), https://www.bookstime.com/ Louisiana (5.11 percent), Colorado (4.91 percent), New York (4.53 percent), and Oklahoma (4.49 percent). The five states with the highest average combined state and local sales tax rates are Louisiana (9.56 percent), Tennessee (9.55 percent), Arkansas (9.45 percent), Washington (9.38 percent), and Alabama (9.29 percent). The five states with the lowest average combined rates are Alaska (1.82 percent), Hawaii (4.50 percent), Wyoming (5.44 percent), Maine (5.50 percent), and Wisconsin (5.70 percent).

For example, candy and soda are generally subject to the higher “general merchandise” rate, but any candy containing flour is not, for sales tax purposes, classified as candy. It’s one of nine states that use a flat tax system rather than a progressive system. Married couples filing jointly with an adjusted gross income (AGI) over $500,000, and taxpayers in all other filing statuses with AGI over $250,000, can’t claim the education expense credit. 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 Single Filer Tax Tables

Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Understanding your tax obligation and potential federal deductions you can take. What’s even more time-intensive is how to deduct IL tax from your federal taxes as an itemized deduction. Your Illinois income includes the adjusted gross income (AGI) amount figured on your federal return, plus any additional income that must be added to your AGI.

Illinois’ estate tax for people who died in 2015 provides an exemption of $4 million. The estate value exemption for 2015 federal estate tax purposes is $5.43 million. Therefore, tentative taxable Illinois estates with adjusted taxable gifts between $4 million and $5.34 million will owe an Illinois estate tax without any corresponding Federal estate tax liability. If you work remotely, you should pay taxes to the state in which the work is performed.

When did Illinois’ state income tax increase to 4.95%?

The state of Illinois has a flat income tax, which means that everyone, regardless of income, is taxed at the same rate. That makes it relatively easy to predict the income tax you will have to pay. The income tax rate in Illinois is 4.95%, after an increase illinois income tax rate from 3.75% in 2017. Illinois also has higher-than-average sales taxes and property taxes. Forty-five states impose state-level sales taxes, while consumers also face local sales taxes in 38 states, including Alaska, which does not impose a statewide tax.