Understanding the state’s rates, taxable income calculations, available credits and deductions, and filing requirements is essential for compliance and effective tax management. The exemption for taxable retirement income has been raised from $20,000 to $50,000. Effective January 1, the state will restructure its individual income tax brackets to reduce taxes for all taxpayers, with reductions targeted at the low- and middle-income levels. illinois income tax rate A new sixth bracket with a 4.3 percent rate will be added, applying to filers who earn between $16,500 and $33,500 on an individual basis and between $25,000 to $50,000 jointly.
The Illinois Income Tax
- The state follows federal adjusted gross income (AGI) as the starting point for tax calculations, with certain Illinois-specific additions and subtractions.
- Food, drugs and medical appliances are all subject to a statewide tax rate of 1% of purchase price, in addition to local taxes of up to 1.25%, for a total tax of up to 2.25%.
- The requirements are similar to federal income tax procedures, including withholding and payments of estimated tax.
- Connecticut is the first state to provide more than 20 years of carryforwards without the annual utilization limit.
- Almost all states employ a statewide sales tax, which ranges from 2.9 percent in Colorado to 7.5 percent in California.
Capital gains, dividends, and rental earnings are taxed at the same 4.95% rate, unlike the federal system, which differentiates between short-term and long-term capital gains. The credit is limited to single taxpayers with federal AGIs of $250,000, or $500,000 if married and filing jointly. The starting point for your Illinois tax return is your federal adjusted gross income (AGI). Filing jointly often provides advantages like higher income thresholds for credits and deductions, potentially lowering tax liability.
e-Filing: Submit Your Illinois Tax Return Online
Tax burdens rose across the country as pandemic-era economic changes caused taxable income, activities, and property values to rise faster than net national product. Tax burdens in 2020, 2021, and 2022 are all higher than in any other year since 1978. Tax exclusions are an amount of money or income that is not subject to taxation. This credit is for a portion of the expenses you paid for your dependent child or children to attend kindergarten through 12th grade at a public or nonpublic Illinois school.
Federal Income Tax Tables in 2025
Businesses must file Form IL-1120 for corporate income tax or Form IL-1065 for partnerships and S-corporations. The filing deadline is the QuickBooks 15th day of the fourth month following the close of the tax year, typically April 15th for calendar-year taxpayers. Non-compliance results in penalties similar to those for individual taxpayers. Illinois residents and part-year residents with income above $2,325 must file a state tax return. If the deadline falls on a weekend or holiday, it is extended to the next business day.
As a refundable credit, the EITC not only reduces the amount of tax owed but can also result in a refund if the credit exceeds the taxpayer’s total tax liability. This makes the EITC a powerful tool for reducing poverty, incentivizing work, and providing financial support to those who need it most. The credit amount varies based on the taxpayer’s income, marital status, and number of qualifying children, with the intention of providing greater assistance to families with children. The Tax tables below include the tax rates, thresholds and allowances included in the Illinois Tax Calculator 2025. Employers in Illinois must withhold state income tax from employees’ wages and remit these amounts to the Illinois Department of Revenue. The amount withheld is based on the employee’s Cash Flow Management for Small Businesses Form IL-W-4, which determines the number of allowances claimed.
Illinois Income Tax Table
- The fuel tax will increase from 28.5 cents per gallon to 31.8 cents per gallon but will be capped at a 3 percent increase in subsequent years.
- While this exemption benefits retirees, Illinois relies more heavily on other revenue sources, such as property and sales taxes.
- When you retire, Illinois is one of the states that don’t tax retirement income.
- Wyoming voters also passed Amendment A, which creates a separate category for residential property for taxation purposes and allows the legislature to further treat owner-occupied residential property differently.
Some states tie their standard deductions and personal exemptions to the federal tax code, while others set their own or offer none at all. In December 2024, Louisiana policymakers enacted a comprehensive tax reform law, which included individual income tax reforms that took effect January 1, 2025. These reforms included converting three individual income tax brackets into one and moving from a top marginal rate of 4.25 percent to a single rate of 3 percent.