Bottom line: Yes - moving from Illinois to Indiana lowers your state income tax. On a $75,000 salary you would keep about $1,425 more per year.
| Salary (single) | Illinois tax | Indiana tax | Difference |
|---|---|---|---|
| $50,000 | $2,475 | $1,525 | Save $950 |
| $75,000 | $3,713 | $2,288 | Save $1,425 |
| $100,000 | $4,950 | $3,050 | Save $1,900 |
| $150,000 | $7,425 | $4,575 | Save $2,850 |
| $250,000 | $12,375 | $7,625 | Save $4,750 |
Illinois: Illinois uses a flat 4.95% rate with personal exemptions rather than standard deductions.
Indiana: Indiana has a flat 3.05% state rate. Counties may impose additional local income taxes ranging from 0.5% to 2.9%.
Your state income tax is set by where you are a resident, not where your employer is. To stop paying Illinois tax you must genuinely establish residency in Indiana - register to vote, change your driver's license and car registration, move your primary home, and spend more than half the year there. High-tax states like Illinois audit departing high earners, so keep records of your move date.
In the year you move you typically file a part-year resident return in both states: Illinois taxes income earned while you lived there, Indiana taxes the rest. Remote workers should note that a handful of states tax income sourced to the state even for non-residents - check before assuming a clean break.
Indiana has a flat state income tax of 3.05%.
On a $75,000 single-filer salary, the state income tax difference is about $1,425/year (in your favor). Use the calculator for your exact income.
Once you establish residency in Indiana and break Illinois residency, new income is taxed by Indiana. Illinois can still tax income earned while you were a resident - file a part-year return for the move year.
Illinois tax calculator · Indiana tax calculator · Paycheck calculator
Estimates use 2026 state brackets and the standard deduction for a single filer; they exclude local taxes, credits and federal tax. Verify with a tax professional before relocating.