Illinois also accepts online payments of your tax debt with credit cards and debit cards, or through a bank transfer. There is, however, a convenience fee for the use of a credit or debit card when paying your taxes. For official forms and instructions, visit the Illinois Department of Revenue website, which provides up-to-date resources and guidance for taxpayers. Illinois also has reciprocity with the neighboring states of Iowa, Kentucky, Michigan and Wisconsin, which means those states don’t tax Illinois residents who work within their borders. So if you live in Illinois and work in Iowa, Kentucky, Michigan or Wisconsin, you’ll pay tax to your home state. The Illinois K-12 education expense credit can knock up to $750 off your tax bill if you spent more than $250 on qualified education expenses.
- The past four years have brought significant focus on state income tax reform and relief, and with that, something of a flat tax revolution.
- While most in-depth tax software charges a fee, there are several free options available through the states, and simple versions are also offered free of charge by most tax software companies.
- You can file for free using MyTax Illinois, our online account management program for taxpayers.
- Some lawmakers and advocacy groups have called for a move to a progressive tax system, which would introduce tax brackets and higher rates for higher earners.
- The tax is calculated based on an individual’s federal-adjusted gross income and has a flat rate of 4.95%.
- However, it is important to note that Illinois is considering transitioning to a graduated income tax system, where different tax rates would apply to different income levels.
Tax Brackets
Illinois’ flat income tax rate means that every resident, regardless of income level, pays the same individual income tax rate of 4.95 percent. Nonresidents who work in Illinois also must pay income tax to the state, unless they live in Wisconsin, Iowa, Kentucky or Michigan. The only exception is railroad Suspense Account unemployment.More information is on the Illinois Department of Revenue’s website. Watch the video below to learn how to identify your 2024 federal income tax brackets. This means that capital gains are included when calculating an individual’s total taxable income, and are subject to Illinois’ standard income tax rates, which range from 4.95% to 7.99% as of 2021.
How do Illinois tax brackets work?
- Certain high-income taxpayers in Illinois are not eligible for the exemption allowance.
- Our definition of Mostly True is “the statement is accurate but needs clarification or additional information.” That fits here.
- For info on 2011 federal income tax and federal tax refunds, visit the federal income tax and federal tax refund pages.
- A financial advisor can help you understand how taxes may impact your overall financial goals.
Automatic extension payment — We grant an automatic six-month extension of time to file your return. If you receive a federal extension of more than six months, you are automatically allowed that extension for Illinois. These extensions do not grant you an extension of time to pay any tax you owe. If you determine that you will owe tax, we encourage you to use an electronic payment option to pay any tax you owe to avoid penalty and interest on tax not paid by the due date.
- It varies by location, but is generally about 7% of the price of service.
- An alternative is to divide your allowances between the two jobs on the Form IL-W-4 you give to each employer, or you could claim all your allowances with one job and none with the other.
- The property tax credit allows taxpayers to claim 5% of Illinois property tax paid on their principal residence.
- This tool is freely available and is designed to help you accurately estimate your 2026 tax return.
- A financial advisor can help you understand how taxes fit into your overall financial goals.
- Supporters of a graduated income tax system argue that it would allow for a more progressive tax structure, where higher-income individuals would pay a higher tax rate than lower-income individuals.
An In-Depth Look At Chicago’s Excise Taxes And Everything They Cover
- That makes it relatively easy to predict the income tax you will have to pay.
- A tax credit allows taxpayers to reduce the amount of taxes they are required to pay.
- View how much tax you may pay in other states based on the filing status and state entered above.
- It’s crucial for residents to be aware of both the state and local income tax obligations to accurately fulfill their tax responsibilities in Illinois.
- Illinois has a flat corporate income tax rate of 9.500% of gross income.
Interest on unpaid taxes accrues from the original due date, with a current rate of 3% per annum. Severe cases of intentional tax evasion may lead to criminal charges under Illinois law. But taxpayers whose income exceeds $500,000 (married filing income summary jointly filers) or $250,000 (all other filers) can’t claim a personal exemption. There are a few exceptions, including military pay you received as a civilian.Nonresidents — those who only live in the state because of military assignment — are not required to report military pay to Illinois.
For example, the General Homestead Exemption lowers the taxable value of your house and benefits homeowners who have recently remodeled. Remember that certain exemptions are restricted, so it is always advisable to find out whether you qualify. This tax is in addition to federal income tax, Social Security, and Medicare deductions.
How does Illinois income tax affect residents who work in other states?
For individuals using fiscal year reporting, payments are due on the 15th day of the fourth, sixth, and ninth months of the fiscal year, and of the first month after the end of the fiscal year. If you must make estimated tax payments, we encourage you to use an electronic payment option. If you choose to pay by check or money order, must complete Form IL-1040-ES, Estimated Income Tax Payments for Individuals, and mail it with their estimated tax payments.
There’s still the second part of Schoemann’s claim, that Illinois’ rate is almost half of the top bracket in Wisconsin. But many Wisconsinites fall within that third category, which is 0.35 percentage points higher than illinois state income tax rate Illinois. We reached out to Ben Voelkel, a spokesman for Schoemann’s campaign, who pointed us directly to the different rates in Illinois and Wisconsin. Income taxes are likely to stay a big topic in the race for governor. Read on to learn more about what to expect as a current or future Illinois taxpayer. Approximately the third week of each month, the Illinois Department of Revenue certifies to the Office of the Illinois State Comptroller the amounts to be allocated based on net collections from the prior month.
The 2025 tax rates and thresholds for both the Illinois State Tax Tables and Federal Tax Tables are comprehensively integrated into the Illinois Tax Calculator for 2025. This tool is freely available and is designed to help you accurately estimate your 2026 tax return. Illinois provides a standard Personal Exemption tax deduction of $ 2,850.00 in 2025 per qualifying filer and qualifying dependent(s), this is used to reduce the amount of income that is subject to tax in 2025. Employers in Illinois must withhold state income tax from employees’ wages based on Form IL-W-4, Employee’s Illinois Withholding Allowance Certificate, and remit these amounts to the Illinois Department of Revenue. Self-employed individuals or those with significant non-wage income may need to make quarterly estimated tax payments to avoid underpayment penalties.