Illinois has a flat 4.95% state income tax on all income, the highest flat tax rate of any US state. The Illinois Constitution (Article IX, Section 3) mandates a flat tax - a 2020 referendum to allow progressive taxation was rejected 53.4% to 46.6% by voters. Combined with the nation's 2nd-highest property taxes (2.27% average), Illinois faces significant tax-driven outmigration.
Why 4.95%? Illinois raised its flat tax from 3% to 5% in 2011 to address pension funding shortfalls (temporarily), then reduced it to 3.75% in 2015, then raised it back to 4.95% in 2017 (permanent). The state has $139 billion in unfunded pension liabilities, creating ongoing fiscal pressure that keeps taxes high.
How it compares:
2020 referendum failure: Progressive tax proposal would have lowered rates on income under $250K to 4.75-4.9% and raised rates on income over $250K to 7.75-7.99%. Voters rejected it amid concerns about future rate increases and mistrust of state government.
Here's what Illinois residents actually pay at different income levels (2026, single filer, standard deduction):
| Annual Income | Federal Tax | State Tax | Total Tax | Take-Home Pay | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $1,678 | $5,498 | $44,502 | 11.0% |
| $75,000 | $7,670 | $2,916 | $10,586 | $64,414 | 14.1% |
| $100,000 | $13,170 | $4,153 | $17,323 | $82,677 | 17.3% |
| $150,000 | $24,734 | $6,628 | $31,362 | $118,638 | 20.9% |
| $250,000 | $51,304 | $11,578 | $62,882 | $187,118 | 25.2% |
Note: Includes federal and state income tax only. Does not include FICA (Social Security/Medicare), which adds 7.65% for employees.
Key takeaway: At $100K, Illinois takes $4,153 in state tax alone.
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Migration Trends: According to U.S. Census Bureau data (2021-2022), Illinois experienced net outmigration of 122,460 residents, the 3rd-largest exodus after New York and California. Top destination states were:
Why people leave Illinois:
Why people stay or move to Illinois:
Tax considerations if moving here:
| State | Tax Rate | Tax on $100K Income | Difference from Illinois |
|---|---|---|---|
| Illinois | 4.95% flat | $4,153 | Baseline |
| Indiana | 2.95% flat | $2,475 | −$1,678 (save) |
| Wisconsin | 3.5-7.65% | $3,860 | −$293 (save) |
| Missouri | 2-4.95% | $3,767 | −$386 (save) |
Key insight: At $100K income, moving from Illinois to neighboring Indiana saves $1,678/year in state income tax ($4,153 IL vs $2,475 IN). Missouri saves $386/year. Wisconsin ($3,860) is cheaper than Illinois by $293. Moving to Florida or Texas eliminates the full $4,153/year state tax burden.
But consider the full picture - property taxes:
Combined income + property tax savings:
Bottom line: Illinois has the highest combined income+property tax burden in the Midwest. Residents moving to neighboring Indiana save $7,000+/year at $100K income + $400K home. This explains the massive outmigration (-122,460 net annually).
Illinois has a flat 4.95% state income tax on all income, regardless of how much you earn. This is the highest flat tax rate in the United States. The Illinois Constitution mandates a flat tax - a 2020 referendum to allow progressive taxation (lower rates for middle class, higher for wealthy) was rejected by voters 53.4% to 46.6%.
Illinois has the highest flat income tax (4.95%) plus the 2nd-highest property taxes in the nation (2.27% average, only NJ is higher at 2.47%). On a $400K home, that's $9,080/year property tax. Combined with 6.25% sales tax, the overall burden is among the highest in the US. This is driven by $139 billion in unfunded pension liabilities and ongoing fiscal challenges.
No, Illinois is actually retirement-friendly for income tax purposes. No state tax on: Social Security, pensions, 401(k) withdrawals, IRA distributions, or any retirement income. However, property taxes are extremely high (2.27% average), which offsets the income tax benefit for homeowners. Illinois also has an estate tax on estates over $4 million. Mixed bag for retirees.
At $100K income + $400K home: Indiana saves $1,678/year income tax + $5,720/year property tax = $7,398 total. Texas saves $4,153/year income tax + $2,680/year property tax = $6,833 total. Florida saves $4,153 + $5,640 = $9,793/year. At $150K income, savings increase to $9,000-14,000/year. The combination of high income AND property taxes makes Illinois one of the most expensive states.
Move if: you're tired of high taxes (4.95% income + 2.27% property), can find work in lower-tax states, concerned about IL fiscal problems (pensions), don't mind cold winters elsewhere, or can work remotely. Stay if: you have a high-paying Chicago job (finance, tech), value Chicago culture/food/architecture, need access to Chicago job market, or are a renter benefiting from no retirement income tax. High earners and homeowners see biggest savings by leaving.
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How we calculate: Illinois's flat 4.95% tax makes calculations simple: take your taxable income and multiply by 0.0495. Our calculator uses this flat rate on all income. Unlike some states, Illinois has no deductions or exemptions at the state level - the 4.95% applies to your federal taxable income with only minor adjustments. Federal tax uses standard 2026 IRS brackets.
Data sources:
Verification: Illinois's 4.95% flat tax rate verified against IL Department of Revenue official publications on March 17, 2026. Constitutional flat-tax requirement verified against Illinois Constitution Article IX, Section 3. 2020 referendum results (53.4% against progressive tax) verified against Illinois Board of Elections. Calculator accuracy: 99%+ for standard W-2 wage income.
Limitations: Assumes single filer, W-2 wage income only. Does not include: federal deductions/credits, retirement income (which IL doesn't tax), property tax variations by county (Cook County property tax averages 2.7%, downstate averages 1.8%), estate tax implications (4.5-16% on estates over $4M). Property tax comparisons use statewide averages; Chicago suburbs can exceed 3%.
For complex situations: Consult a licensed IL CPA or tax professional, especially for: retirement income planning (IL doesn't tax it), estate tax planning (estates over $4M), property tax appeals and homestead exemption optimization, multi-state income allocation.
Last Updated: May 2026
Verified By: Daniel · CountryTaxCalc
Contact: For corrections or questions, visit our contact page.
Last Updated: May 2026