Illinois State Income Tax: Rates and Who Pays in 2023
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The Illinois income tax rate is a flat 4.95%. Unlike the federal government and many other states, Illinois does not have tax brackets that impose higher rates on people who earn more.
Illinois state income taxes were due on the same day as federal income taxes: April 18, 2023, for tax year 2022. The state grants an automatic six-month extension to anyone who can't file on time. Note, however, that even taxpayers who need an extension must pay whatever taxes they owe by the normal filing deadline or face potential penalties.
Illinois state income tax rates and tax brackets
Illinois does not have tax brackets, so calculating your rate should be pretty simple. If you have a dollar or $1 billion that is subject to Illinois income tax, you owe 4.95% of that money to the state.
However, Illinois has a handful of tax-saving programs that may affect your final tax bill, and these can apply differently based on income or other life circumstances.
Illinois state income tax deductions and credits
Here are some key tax reduction programs in Illinois, and how to qualify.
Illinois earned income tax credit (EITC)
The Illinois earned income tax credit mirrors the federal earned income tax credit for low- and moderate-income taxpayers. Because it's a refundable tax credit, the Illinois EITC can reduce your taxes owed on a dollar-for-dollar basis, and it can even result in a refund.
In Illinois, the EITC is strongly tied to the federal program of the same name. If you qualify for the federal program, you'll generally qualify for the state credit. The amount of the credit is also based on your federal eligibility:
For tax years 2022 (filed by April 2023) and before, the Illinois EITC is 18% of whatever you got from the federal program.
For tax years 2023 (filed in 2024) and beyond, the Illinois EITC rises to 20% of the federal credit.
To figure out whether you qualify, state revenue officials recommend checking the IRS' eligibility guidelines. For starters, you'll need to have worked during the tax year and have income below $59,187.
» Learn more: All about the federal earned income tax credit
Illinois K-12 education expense credit
The Illinois K-12 education expense credit can knock up to $750 off of your tax bill if you spent more than $250 on qualified education expenses. These expenses include tuition, book rentals and lab fees.
There are some exceptions, however. You can't claim daycare, preschool or college costs, for example. Certain materials or equipment— such as musical instruments — that are used for qualified programs may not be acceptable if they "are not significantly used up during the school year."
The credit is not for everyone. Taxpayers whose federal adjusted gross income exceeds $250,000 ($500,000 for married couples filing jointly), are not eligible to claim this tax benefit.
Illinois tax deductions
Illinois also differs from the federal government in the way it handles tax deductions. The state doesn't have itemized deductions or a standard deduction in the traditional sense. Rather, Illinois offers a set of specific expenses that can be subtracted from your taxable income. These include:
Some contributions to college savings accounts.
Contributions to ABLE accounts, which are savings plans for people with disabilities.
Income from tax-exempt bonds issued by the state or local Illinois governments.
Illinois exemption allowance
In addition, Illinois has what is called an exemption allowance, which is a set amount that nearly anyone who earned a paycheck can knock off their taxable income. The exemption for 2022 is as high as $4,850 for married couples filing jointly ($2,425 for single filers).
The difference between the exemption allowance and the standard deduction is that you can still take it even if you have other subtractions from your income as discussed above. With the standard deduction, generally speaking, you have to choose whether to take it or add up your itemized deductions and claim those instead.
Note that there are some taxpayers who won’t qualify for the full exemption (or potentially any at all), including:
If someone else can claim you as a dependent, and you have your own income.
If you have more than $250,000 in adjusted gross income ($500,000 for married couples filing together).
Do I have to pay Illinois state income tax?
You have to file an Illinois state tax return if:
You’re an Illinois resident, and you’re required to file a federal tax return.
You’re an Illinois resident without a federal filing requirement, but your Illinois income exceeds your exemption allowance.
You’re not an Illinois resident but earned a certain amount of money from a source in Illinois during the tax year.
You lived in Illinois for part of the year and had income during that time.
Illinois also has a set of tax agreements with the neighboring states of Iowa, Kentucky, Michigan and Wisconsin through which 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 have to pay tax to your home state.
Likewise, residents of Iowa, Kentucky, Michigan and Wisconsin who work in Illinois are not required to file an Illinois state income tax return unless they earned certain Illinois non-wage income, such as lottery winnings.
Learn more: See state income tax brackets here
Am I a resident for Illinois state income tax purposes?
There are three types of residency statuses when it comes to Illinois state tax. They determine what portion of your income the state will tax.
If your Illinois residency type is ...
… Illinois taxes this part of your income
All income from all sources inside and outside Illinois.
All income received while a resident, plus income from Illinois sources while a nonresident.
Income from Illinois sources if your adjusted gross income is higher than your Illinois exemption allowance.
Illinois state sales tax
Illinois has a state sales tax of 6.25%, though many foods and drugs are taxed at a lower 1% rate.
On top of that state sales tax, local governments can impose their own sales taxes, which can add to the costs of purchases made in different jurisdictions.
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