# Illinois income tax rate: a flat 4.95% on net income

Source: https://taxbracketsdesk.com/state-taxes/illinois-income-tax-rate
Publisher: Tax Brackets Desk (taxbracketsdesk.com), independent editorial site
Topic: State Income Tax
Last updated: 2026-09-19

> The Illinois income tax rate is a flat 4.95% of net income, the rate in effect since July 1, 2017, according to the Illinois Department of Revenue. Every resident pays the same rate on every taxable dollar. The Illinois exemption allowance is $2,925 per person for tax year 2026, up from $2,850 for 2025.

## Key facts

- Illinois income tax rate: 4.95% of net income (since July 1, 2017)
- Exemption allowance, 2026: $2,925 per exemption
- Exemption allowance, 2025: $2,850 per exemption
- Extra exemption: $1,000 for age 65+ and $1,000 for legally blind
- No exemption if federal AGI exceeds: $500,000 joint; $250,000 all other returns
- Property tax credit: 5% of property tax on your Illinois main home

## What is the Illinois income tax rate?

The Illinois income tax rate for individuals is 4.95% of net income. The Illinois Department of Revenue lists that rate as effective July 1, 2017, and it applies to tax year 2025 returns filed in 2026 and to tax year 2026 returns filed in 2027.

Net income is the key term. In Illinois, net income means your base income (federal adjusted gross income plus Illinois additions minus Illinois subtractions) minus your exemption allowance. You report it on Form IL-1040, Individual Income Tax Return, which for tax year 2025 was due April 15, 2026.

## How are Illinois income tax brackets structured?

Illinois has no brackets. The Illinois Constitution, in Article IX, Section 3, requires any income tax on individuals to be at a non-graduated rate, so the state cannot use a ladder of rising rates like the federal system or like [New Jersey income tax rates](https://taxbracketsdesk.com/state-taxes/new-jersey-income-tax-rates), which climb from 1.4% to 10.75%.

A flat rate means your marginal rate and your top rate are both 4.95%, whether you earn $30,000 or $3 million. Your effective rate is lower than 4.95% because the exemption allowance and some subtractions are taken out before the rate is applied. The difference between the two ideas is covered in [marginal tax rate explained](https://taxbracketsdesk.com/federal-tax-brackets/marginal-tax-rate-explained).

### How the Illinois rate has changed

| Period | Rate |
| --- | --- |
| 1969 through 1982 | 2.5% |
| 1990 through 2010 | 3% |
| 2011 through 2014 | 5% |
| 2015 through June 30, 2017 | 3.75% |
| July 1, 2017 to present | 4.95% |

Illinois individual income tax rate by period

The periods above come from the Department of Revenue's prior-year rate page, which also lists shorter periods at 2.5% to 3% in the 1980s. The 2017 change took effect mid-year, so 2017 returns used a blended rate.

## Illinois exemption allowance and other reductions

Illinois has no standard deduction and does not let you use federal itemized deductions. The main reduction is the Illinois exemption allowance, a fixed amount per person claimed on Line 10 of Form IL-1040 and adjusted each year for inflation.

| Item | Tax year 2025 | Tax year 2026 |
| --- | --- | --- |
| Each taxpayer, spouse and dependent | $2,850 | $2,925 |
| Additional, age 65 or older | $1,000 | $1,000 |
| Additional, legally blind | $1,000 | $1,000 |
| Allowance lost if federal AGI is over | $500,000 joint / $250,000 other | $500,000 joint / $250,000 other |

Illinois exemption allowance by tax year

The allowance is all-or-nothing at the income limit: a joint return with federal AGI of $500,001 enters zero on Line 10. Dependents are listed on Schedule IL-E/EITC, Illinois Exemption and Earned Income Credit Schedule. Someone who can be claimed on another person's return gets the allowance only if their Illinois base income is no more than the allowance amount.

### Retirement income is subtracted

Line 5 of Form IL-1040 subtracts federally taxed Social Security benefits and most retirement income, including qualified employer plans such as 401(k)s, IRAs, and government pensions, as described in Publication 120, Retirement Income. A retiree whose income is entirely Social Security and pension payments often owes no Illinois income tax at all, even with a large federal AGI.

### Credits on Schedule ICR

- Property tax credit: 5% of the Illinois property tax paid on your principal residence.
- K-12 education expense credit: for qualified school expenses above $250 paid for a full-time student under 21, capped at $750 per family.
- Both credits are unavailable if federal AGI exceeds $500,000 on a joint return or $250,000 on any other return.
- Illinois Earned Income Credit and Child Tax Credit, claimed on Schedule IL-E/EITC; for 2025 the Child Tax Credit rose to 40% of the Illinois EIC for families with a child under 12.

## Does Illinois have local income taxes?

No. Illinois cities, counties and school districts do not levy a personal income tax, and that includes Chicago. Local services in Illinois are paid for mainly through property taxes and sales taxes, which is one reason the state's overall tax burden cannot be judged from the 4.95% rate alone.

Illinois does have reciprocal agreements with Iowa, Kentucky, Michigan and Wisconsin. An Illinois resident who works in one of those states reports the wages on the IL-1040 and pays Illinois tax on them, while a resident of one of those states working in Illinois pays tax only to their home state on wages.

## Did Illinois change its income tax rate for 2026?

No. The Illinois income tax rate remains 4.95% for tax year 2026. What changed is the exemption allowance, which rises from $2,850 to $2,925 per exemption, as listed in the Department of Revenue's Informational Bulletin FY 2026-15.

Any change to a graduated system would require amending the state constitution. Voters rejected a proposed amendment to allow graduated rates in November 2020, so a flat rate stays in place unless a new amendment passes. The 2026 Form IL-1040 and instructions are not yet published; they usually appear in December or January.

## Worked example: Illinois income tax for a family of four

Take a married couple filing jointly with two children, federal AGI of $120,000 for 2026, no Illinois additions or subtractions, and $6,000 of property tax paid on their Illinois home.

1. Base income: $120,000 (federal AGI with no Illinois adjustments).
2. Exemption allowance: 4 people x $2,925 = $11,700.
3. Net income: $120,000 - $11,700 = $108,300.
4. Tax at 4.95%: $108,300 x 0.0495 = $5,360.85, rounded to $5,361.
5. Property tax credit: 5% x $6,000 = $300.
6. Illinois income tax after credit: $5,061.

The family's effective Illinois rate is about 4.2% of AGI, below the 4.95% headline because of the exemptions and the credit. If this same couple retired and lived on $120,000 of Social Security and pension income, the Line 5 subtraction would take their base income close to zero. Compare how other states treat similar incomes on the [state income tax rates](https://taxbracketsdesk.com/state-taxes) page or the neighboring flat-rate state covered in [Pennsylvania income tax](https://taxbracketsdesk.com/state-taxes/pennsylvania-income-tax-rate).

## Common questions

### How much is Illinois state tax on $50,000?

For a single filer with $50,000 of federal AGI and no Illinois adjustments in 2026, net income is $50,000 minus the $2,925 exemption, or $47,075. At 4.95%, Illinois tax is about $2,330, an effective rate of roughly 4.7%.

### Does Illinois tax retirement income?

Generally no. Form IL-1040 Line 5 subtracts federally taxed Social Security, railroad retirement, qualified employer plan distributions, IRA distributions and government pensions. Wages, interest, dividends and capital gains remain taxable.

### What is the Illinois exemption allowance for 2026?

The Illinois exemption allowance for tax year 2026 is $2,925 for each taxpayer, spouse and dependent, with an extra $1,000 for age 65 or older and $1,000 for legal blindness. It is not allowed if federal AGI exceeds $500,000 on a joint return or $250,000 on other returns.

### Does Chicago have a city income tax?

No. Chicago residents pay only the 4.95% Illinois income tax, with no city income tax on wages. Chicago's local revenue comes from property, sales and other taxes.

### When was the Illinois income tax rate last changed?

The rate rose from 3.75% to 4.95% effective July 1, 2017. Before that it was 5% from 2011 through 2014 and 3.75% from January 2015 through June 2017.

## Sources

- [Illinois Department of Revenue, Income tax rates](https://tax.illinois.gov/research/taxrates/income.html)
- [Illinois Department of Revenue, Individual income tax rates for prior years](https://tax.illinois.gov/research/taxrates/individualprioryears.html)
- [Illinois Department of Revenue, What is the Illinois exemption allowance?](https://tax.illinois.gov/questionsandanswers/answer.851.html)
- [Illinois Department of Revenue, Informational Bulletin FY 2026-15](https://tax.illinois.gov/research/publications/bulletins/fy-2026-15.html)
- [Illinois Department of Revenue, 2025 Form IL-1040 instructions](https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf)
- [Illinois Department of Revenue, 2025 Schedule ICR instructions](https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-schedule-icr-instr.pdf)