Illinois has a flat 4.95% state income tax on all income, one of the higher flat tax rates among US states. The Illinois Constitution (Article IX, Section 3) mandates a flat tax - a 2020 referendum to allow progressive taxation was rejected by about 53% to 47% of voters. Combined with the nation's highest property taxes (tied with New Jersey at 1.88% 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 | $2,330 | $9,975 | $40,025 | 20.0% |
| $75,000 | $7,670 | $3,568 | $16,975 | $58,025 | 22.6% |
| $100,000 | $13,170 | $4,805 | $25,625 | $74,375 | 25.6% |
| $150,000 | $24,734 | $7,280 | $43,489 | $106,511 | 29.0% |
| $250,000 | $51,304 | $12,230 | $79,048 | $170,952 | 31.6% |
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 $4,805 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 | $4,805 | Baseline |
| Indiana | 2.95% flat | $2,921 | −$1,884 (save) |
| Wisconsin | 3.5-7.65% | $4,428 | −$377 (save) |
| Missouri | 2-4.7% | $3,670 | −$1,135 (save) |
Key insight: At $100K income, moving from Illinois to neighboring Indiana saves $1,884/year in state income tax ($4,805 IL vs $2,921 IN). Missouri saves $1,135/year. Wisconsin ($4,428) is cheaper than Illinois by $377. Moving to Florida or Texas eliminates the full $4,805/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 $6,000+/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 among the higher flat tax rates 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 about 53% to 47% of voters.
Illinois has one of the higher flat income tax rates (4.95%) plus property taxes tied for the highest in the nation (1.88% average, tied with New Jersey). On a $400K home, that's $7,520/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 (1.88% 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 $1,884/year income tax + $4,480/year property tax = $6,364 total. Texas saves $4,805/year income tax + $1,920/year property tax = $6,725 total. Florida saves $4,805 + $4,400 = $9,205/year. At $150K income, savings increase to $7,000-12,000/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 + 1.88% 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. Illinois has no standard deduction; the 4.95% applies to your federal adjusted gross income (with Illinois modifications) minus a $2,925 exemption allowance per person. 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 (about 53% against progressive tax) verified against Illinois Board of Elections.
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