The Tax Brief real effective rates for 111+ countries — bi-weekly, free.
HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Illinois VS COUNTRY B New Jersey

Side-by-side analysis of income tax, effective rates, and take-home pay for Illinois and New Jersey in 2026.

Daniel · CountryTaxCalc Updated August 2026 Tax Comparison 2026
Calculate your take-home → See all comparisons →
OVERVIEW
Illinois and New Jersey take very different paths to a similar tax burden. Illinois charges a flat 4.95% on every dollar, while New Jersey uses 7 progressive brackets from 1.4% to 10.75%. At $100,000 income, New Jersey's lower brackets win out — NJ residents pay $3,218 in state tax versus Illinois's $4,153, a $935/year savings. But that advantage flips as income rises: because Illinois never rises above 4.95%, it becomes the cheaper state for anyone earning roughly $166,000 or more, where New Jersey's 6.37% marginal bracket takes over. Property tax offers no relief either way — Illinois and New Jersey are tied for the highest average property tax in the nation at 1.88%, meaning a $400,000 home costs about $7,520/year in either state. The real decision comes down to income level and job market: Chicago's finance and manufacturing base versus New Jersey's pharma corridor and New York City commuter access.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🌽
COUNTRY A
Illinois
TAX RATE
4.95%
Flat Tax
Flat 4.95% rate (highest flat tax in the US)
🏖️
COUNTRY B
New Jersey
TAX RATE
1.4-10.75%
Progressive
7 brackets from 1.4% to 10.75%
TYPICAL ANNUAL DIFFERENCE
Moving from New Jersey → Illinois at $100,000
$935
That's $78/month back in your pocket
Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.
GROSS INCOME
🌽 IL TAX
🏖️ NJ TAX
SAVINGS
10-YEAR
$50,000
$1,678
$523
NJ saves $1,155
$11,550
$75,000
$2,916
$1,762
NJ saves $1,154
$11,540
$100,000
$4,153
$3,218
NJ saves $935
$9,350
$150,000
$6,628
$6,403
NJ saves $225
$2,250
$250,000
$11,578
$12,773
IL saves $1,195
$11,950
$500,000
$23,952
$28,698
IL saves $4,746
$47,460
💡

CountryTaxCalc.com is reader-supported. When you use our partner links, we may earn a commission at no cost to you. This helps us provide free tax calculators and comparison tools. Learn more about our affiliate partnerships

Talk to a Real CPA

Taxhub

★ 4.8 verified reviews  ·  3,758 reviews

Moving between states means a complex multi-state tax return. Taxhub matches you with a real CPA via video call — average cost $325. Rated 4.8★ by 3,700+ clients.

⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.

Get Matched With a CPA →

Interested in reaching this audience? Advertise on CountryTaxCalc →

🌽

Illinois Pros & Cons

+ PROS
  • Simple flat 4.95% rate — no bracket math, easy to plan around at any income
  • Better for high earners: never rises above 4.95%, unlike NJ's 10.75% top rate
  • Chicago job market: strong finance, manufacturing, and healthcare base
  • Illinois doesn't tax retirement income — Social Security, pensions, and 401(k)/IRA withdrawals are all exempt
  • No local income tax anywhere in the state, unlike Philadelphia or NYC-adjacent commuter taxes
− CONS
  • Tied with New Jersey for the highest average property tax in the US (1.88%)
  • $139 billion in unfunded pension liabilities creates real risk of future rate increases
  • Net outmigration of over 122,000 residents in a single recent year (3rd-worst in the US)
  • Cold winters and a shrinking population base compared to Sun Belt states
🏖️

New Jersey Pros & Cons

+ PROS
  • Lower effective rate than Illinois for incomes under roughly $166,000
  • New Jersey doesn't tax Social Security benefits
  • Direct access to New York City jobs via PATH/NJ Transit without living in NYC
  • Consistently ranks among the top 3 states nationally for public school quality
− CONS
  • 10.75% top rate is the 3rd-highest in the nation, hitting income over $1,000,000
  • Tied with Illinois for the highest average property tax in the US (1.88%)
  • NJ taxes most retirement income (401k/IRA/pension) above modest thresholds, unlike Illinois
  • 2% exit tax withholding applies when selling a home and leaving the state (refundable if overpaid)
FAQ

Frequently Asked Questions

Is Illinois or New Jersey cheaper for state income tax?

It depends on income. At $100,000, New Jersey is cheaper ($3,218 vs Illinois's $4,153), a $935/year savings, because NJ's lower brackets (1.4-6.37%) haven't kicked in fully yet. But because Illinois never exceeds its flat 4.95%, it becomes cheaper than NJ above roughly $166,000, where NJ's 6.37% marginal bracket starts costing more. At $500,000, Illinois saves $4,746/year over New Jersey.

Why are Illinois and New Jersey both known for high property taxes?

Both states are tied for the highest average property tax rate in the US at 1.88%. On a $400,000 home, that's about $7,520/year in either state — roughly double the national average. Illinois's high rate stems largely from local school funding and its pension crisis; New Jersey's stems from high local government and school spending combined with dense, high-value real estate.

Does Illinois or New Jersey tax retirement income?

Illinois is far more retirement-friendly: it exempts Social Security, pensions, and all 401(k)/IRA withdrawals from state tax entirely. New Jersey exempts Social Security but taxes most other retirement income (pensions, 401(k), IRA) above modest exclusion thresholds that phase out at higher income levels. For retirees living on withdrawals plus a pension, Illinois is the clear winner on income tax, though its property tax remains equally high.

At what income level does Illinois become cheaper than New Jersey?

The crossover is around $166,000 in gross income. Below that, New Jersey's lower progressive brackets keep its state tax bill under Illinois's flat 4.95%. Above it, New Jersey's 6.37% marginal bracket (which applies from $75,000 to $500,000 of taxable income) pushes NJ's total above what Illinois's flat rate would charge on the same income.

How much does New Jersey's exit tax cost when moving to Illinois?

New Jersey withholds an estimated tax payment (2% of the sale price, or the calculated capital gain amount, whichever applies) when a home is sold as part of leaving the state. This isn't an extra tax — it's a withholding against the actual tax owed, and any overpayment is refunded when you file your final NJ return. Illinois has no comparable exit tax.

Which state has a better job market, Illinois or New Jersey?

Chicago (Illinois) is a major hub for finance (CME Group, Citadel), manufacturing (Boeing, Caterpillar), and healthcare (Abbott, Baxter). New Jersey's strength is pharmaceuticals (Johnson & Johnson, Merck, Bristol Myers Squibb) plus proximity to Manhattan finance jobs via commuter rail. Both offer strong salaries; the right choice depends on industry rather than tax rate alone.

Is Illinois's flat tax likely to increase?

Illinois has $139 billion in unfunded pension liabilities, and many analysts expect pressure for future rate increases beyond the current 4.95% flat rate. A 2020 referendum to allow a progressive tax structure (which would have raised rates on income over $250,000) was rejected by voters 53.4% to 46.6%, so any future increase would likely have to apply to all income levels equally under the state's constitutional flat-tax requirement.

Can I avoid New Jersey's high property tax by moving to Illinois?

No — Illinois and New Jersey are tied for the highest average property tax rate in the country at 1.88%. Moving between them offers no property tax relief; both states will cost roughly $7,520/year in property tax on a $400,000 home. Homeowners looking to cut property tax would need to consider a lower-tax state like Indiana (0.84%) or Colorado (roughly 0.5%) instead.
From the brief
NL27%new 2027 rate, down from 30%
DK65.4kkr/mo threshold, cut from 78k
MT1940snon-dom regime unchanged since
The Tax Brief · Subscribe free

More like this, every two weeks.

Verified rates, real after-tax figures, plain English. Free.

Bi-weekly. No spam. Unsubscribe in one click.