🏙️ COUNTRY A Illinois VS 🤠 COUNTRY B Texas

Illinois exempts income from 'retirement plans' defined under specific criteria. Social Security is fully exempt. Income from qualified defined-benefit pension plans (public employee pensions including SERS, TRS, IMRF; federal government pensions; military pensions) is fully exempt. However, traditional IRA and 401(k) distributions are generally taxable in Illinois at 4.95%, as these are defined contribution plans rather than 'pension' plans under Illinois law. This distinction is critical: a retired Illinois teacher drawing a state pension pays no Illinois income tax on it; a private sector retiree drawing from a 401(k) does.

Illinois property taxes fund local governments and schools with minimal state support. The state has the highest effective property tax rate in the US at approximately 2.2%. Cook County (Chicago) and collar counties regularly see effective rates of 1.8–2.8%. There is no Homestead Exemption comparable to Florida's ($50,000 off assessed value). Illinois does offer a Senior Freeze Exemption (for those 65+ with income under $65,000), which limits assessed value increases, but property tax bills remain among the highest nationally. This is the single biggest financial burden for Illinois retirees who own homes.

Illinois averages approximately 2.2%; Texas approximately 1.6%. On a $300,000 home: Illinois property tax ≈ $6,600/year; Texas ≈ $4,800/year — a difference of $1,800/year. On a $500,000 home: Illinois ≈ $11,000/year; Texas ≈ $8,000/year. Texas has the Texas Homestead Exemption (reduces assessed value by $100,000 for the school district portion) and a senior freeze for homeowners 65+. Illinois has the Senior Freeze Exemption. On balance, Illinois retirees pay $1,500–$3,000 more per year in property tax than Texas retirees, depending on home value.

It depends on your income source. If your retirement income is primarily from an Illinois public pension and Social Security: you pay effectively zero Illinois income tax already. The Texas advantage on income tax doesn't apply. You'd be comparing Illinois property tax vs Texas property tax — and Texas is better, but the saving ($1,500–$2,500/year depending on home value) may not justify moving. If your income includes significant IRA or 401(k) withdrawals: Texas saves you 4.95% on those distributions, plus the property tax difference. At $150,000 in IRA withdrawals, that's $7,400 in income tax plus $1,500–$2,500 in property tax — a combined $9,000/year saving that makes Texas compelling.

No. Illinois abolished its state estate tax in recent years and there is no Illinois inheritance tax. Both Illinois and Texas follow the federal estate tax threshold. For estate planning purposes, both states are equivalent — neither imposes additional state-level taxes on wealth transferred at death.