Illinois Income Tax Brackets & Rates 2026

Illinois Income Tax Overview for 2026

Illinois (IL) imposes a flat income tax rate of 4.95% on all taxable income. Illinois uses a flat 4.95% rate with personal exemptions rather than standard deductions.

For the 2026 tax year, Illinois residents must file both state and federal income tax returns. Your IL state tax is calculated on your state taxable income, which generally starts with your federal adjusted gross income (AGI) and applies state-specific adjustments and deductions. Illinois uses a personal exemption system rather than a standard deduction.

Your combined federal and IL effective tax rate depends on your total income, filing status, deductions, and credits.

SALT Deduction and Illinois Taxes in 2026

The State and Local Tax (SALT) deduction allows taxpayers who itemize on their federal return to deduct state and local taxes paid, including state income taxes and property taxes. Under the One Big Beautiful Bill Act (OBBBA), the SALT cap has been raised to $40,000 for the 2026 tax year, up from the $10,000 cap that was in place since 2018.

For Illinois residents, this is significant. With IL's moderate tax rates, most residents will find the $40,000 SALT cap more than sufficient to deduct all their state and local taxes. Taxpayers should compare their total SALT amount against the $40,000 cap to determine whether itemizing benefits them over the standard deduction.

The $40,000 SALT cap applies to the combined total of state income taxes (or sales taxes if elected), local income taxes, and property taxes. This cap is the same regardless of filing status. Use our SALT Deduction Calculator to determine your optimal strategy.

How Federal Taxes Apply to Illinois Residents

All Illinois residents are subject to federal income tax, which uses seven progressive brackets for 2026: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The federal standard deduction is $16,100 for single filers and $32,200 for married filing jointly. Under the OBBBA, new provisions include tax-free overtime pay, tax-free tips for service workers, and an additional $4,000 deduction for seniors aged 65 and older.

Your total tax liability as a IL resident combines your federal tax obligation with your Illinois state tax plus FICA taxes (Social Security at 6.2% and Medicare at 1.45%). Self-employed individuals in Illinois owe both the employee and employer portions of FICA (15.3% total) but can deduct the employer portion. Use our Federal Income Tax Calculator to compute your exact federal liability.

Tax Planning Tips for Illinois Residents

• Evaluate itemizing vs. standard deduction: With the $40,000 SALT cap, IL residents with high state income and property taxes should compare their itemized deductions against the standard deduction each year.
• Maximize retirement contributions: Contributing to a 401(k) or traditional IRA reduces both your federal and Illinois taxable income, providing a double tax benefit.
• Consider HSA contributions: If eligible, an HSA provides triple tax savings: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. The 2026 limit is $4,300 for individuals.
• Review withholding: Use your combined federal and state tax liability to ensure proper withholding, avoiding both underpayment penalties and excessive refunds.
• Track estimated payments: If you have self-employment income or significant investment income, make quarterly estimated payments to both the IRS and Illinois to avoid penalties.

Illinois vs. Other States: Tax Comparison

Compared to the national landscape, Illinois's top rate of 4.95% is near the national average. Some states have no income tax (FL, TX, NV), while others like California (12.3%) charge significantly more. When comparing states, consider the full tax picture including property taxes, sales taxes, and cost of living, not just income tax rates.

Illinois Tax Overview

Illinois imposes a flat 4.95% income tax rate, as the state constitution requires a flat rate structure. A 2020 ballot measure to allow graduated rates was rejected by voters. Illinois has some of the highest property taxes in the nation, averaging 2.07% of assessed value. Combined with local sales taxes that can exceed 10% in Chicago, the overall tax burden is substantial despite the moderate income tax rate.

Illinois has a state sales tax rate of 6.25% (up to 11% with local) and an average effective property tax rate of 2.07%. When combined with the income tax, these additional levies form the complete state tax picture that residents should evaluate. The Illinois tax authority (Illinois Department of Revenue) oversees all state tax administration and can be reached at (800) 732-8866 for questions about filing, payments, and account issues.

Understanding how Illinois's tax system interacts with federal taxes is critical for accurate financial planning. Your combined effective tax rate includes federal income tax (10% to 37%), Illinois state income tax, FICA taxes (7.65% for employees), and any applicable local taxes. Proper planning across all these layers can save thousands of dollars annually.

Illinois Tax Deductions and Credits

Illinois provides a personal exemption of $2,625 per person rather than a standard deduction. The state offers an earned income credit equal to 20% of the federal EITC, an education expense credit (up to $750 per family for K-12 expenses), a property tax credit equal to 5% of property taxes paid on a primary residence, and a credit for taxes paid to other states. Illinois also allows a subtraction for retirement income including Social Security, pension, and retirement plan distributions.

In addition to state-specific benefits, Illinois residents can take advantage of federal tax deductions and credits. For the 2026 tax year, key federal provisions include the standard deduction ($16,100 single, $32,200 married filing jointly), the child tax credit (up to $2,000 per qualifying child), the earned income tax credit for low-to-moderate income workers, and the $40,000 SALT deduction cap under the OBBBA. Illinois state income taxes are included in the SALT calculation, so residents paying significant state income tax should evaluate whether itemizing produces a larger deduction than the standard deduction.

Taxpayers should also explore retirement-related tax benefits available to Illinois residents. Contributions to 401(k) plans (up to $23,500 for 2026, plus $7,500 catch-up for age 50+) and traditional IRAs (up to $7,000, plus $1,000 catch-up) reduce both federal and state taxable income. Health Savings Account (HSA) contributions provide a triple tax benefit: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

Tax Tips for Illinois Residents

Illinois residents should file using MyTax Illinois for fast processing and direct deposit refunds within 4-6 weeks. Remember that all retirement income, including Social Security and pension distributions, is exempt from Illinois income tax, making the state attractive for retirees despite its high property taxes. If you work in a reciprocal agreement state (Iowa, Kentucky, Michigan, or Wisconsin), you only pay income tax to your state of residence.

For the 2026 tax year, Illinois residents should also be aware of key provisions under the OBBBA. Overtime pay (beyond 40 hours per week) is exempt from federal income tax, tips earned by service workers are federally tax-free, and seniors age 65+ receive an additional $4,000 federal deduction. These provisions apply to IL residents regardless of state tax status and can significantly impact take-home pay and total tax liability.