Illinois Tax Calculator 2023-2024: Estimate Your Taxes - Forbes Advisor (2024)

What You Need To Know About Illinois State Taxes

Illinois requires you to pay taxes if you’re a resident or nonresident that receives income from an Illinois source. The state income tax rate for individuals is 4.95%; the sales tax rate is 1% for qualifying food, drugs and medical appliances and 6.25% on general merchandise.

The state of Illinois offers a personal exemption and tax credits, such as the earned income tax credit and the education expense credit.

Illinois Income Tax Rate

The state of Illinois has one flat tax rate for individual income: 4.95%.

Income Exemption Allowance for Illinois

Illinois does not have a standard or itemized deduction; instead, it offers a personal exemption of $2,425 for tax years beginning in 2022. Taxpayers over 65 (or legally blind) who file tax returns jointly are allowed an additional $1,000.

Illinois State Income Tax Credits

Earned Income Tax Credit (EITC/EIC)

The Illinois Earned Income Tax Credit/Earned Income Credit is for working people with low to moderate income to help reduce the amount of tax they owe. The credit is refundable, which means that if this credit exceeds the tax you owe, it may result in a refund. You can only claim the Illinois EITC/EIC if you qualify for it on your federal income tax return and it’s worth 30% of your federal EITC/EIC.

You may qualify for the federal EITC/EIC if your adjusted gross income (AGI) is under $63,398 (actual threshold varies by filing status and number of dependents). You must also meet basic rules such as having investment income below $11,000 and a valid Social Security number, and either meet the requirements for those without a child or meet all of the qualifying child rules.

Education Expense Credit

Qualified education expenses over $250 are eligible for a tax credit. Parents or legal guardians of full-time students under the age of 21 at the end of the school year can claim the credit as long as the student attended kindergarten through 12th grade at a public or nonpublic school in Illinois during the tax year. Only residents can claim the credit.

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.

Invest in Kids Credit

Contributions to a qualified scholarship granting organization are eligible for a tax credit equal to 75% of the contribution. The total credit claimed per taxpayer can’t exceed $1 million per year. You can’t claim this credit if you claimed a portion of the contribution on your federal tax return. Any credit amount that exceeds your tax liability can be carried forward for five years.

However, after December 31, 2023, the tax credit won’t be available.

Property Tax Credit

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.

Do I Have to Pay Income Tax in Illinois?

You are required to file an Illinois tax return if you receive income from Illinois and fall into one of the following categories:

• Resident:Your place of residence was in Illinois for the entire year. It can also be where you live and plan to return after temporary absences, which include: Duty in the U.S. armed forces, residency in a foreign country, out-of-state residence as a student or out-of-state residence during the summer or winter.
• Part-year resident: You are considered a part-year resident if you established Illinois residency during the year, or you were an Illinois resident and became a resident of another state during the year.
• Nonresident: Non-residents that earned enough income from an Illinois source to have a tax liability must file a tax return.

Sales Tax and Sales Tax Rates

Illinois has two different sales tax rates: 1% for qualifying food, drugs and medical appliances, and 6.25% on general merchandise and items requiring a title. Counties can also implement their own tax rates; refer to the Illinois Tax Rate Finder for more information.

Property Taxes and Property Tax Rates

Property Tax Exemptions

Illinois offers a homestead exemption up to a maximum of $10,000 in Cook County and $6,000 in all other counties. You must own the property and use it as your principal dwelling place. The exemption varies for others, such as persons with disabilities and veterans.

Capital Gains Taxes

Illinois taxes capital gains at your regular tax rate.

Inheritance and Estate Tax

Trusts and estates pay 4.95% income tax in Illinois. Also, trusts pay a replacement tax of 1.5%.