Illinois income tax rate for 2025 and 2026: a flat 4.95%

Illinois taxes the net income of individuals at a flat 4.95% for tax year 2025 and for tax year 2026. The 2025 Form IL-1040 multiplies net income by 4.95%, and the Illinois Department of Revenue (IDOR) uses the same rate in its 2026 estimated tax worksheet and its 2026 withholding tables. The rate took effect July 1, 2017, and no change is scheduled. Corporations other than S corporations pay a different rate: 7%, plus a 2.5% personal property replacement income tax.

There are no tax brackets. The Illinois Constitution says a tax on income “shall be at a non-graduated rate” and allows only one such tax on individuals, so the same 4.95% applies to the first dollar of net income and the last. Voters turned down an amendment that would have allowed graduated rates on November 3, 2020.

No Illinois city or county levies an income tax, Chicago included. The constitution lets a home-rule unit such as Chicago tax income or earnings only if the General Assembly allows it by law, and the legislature’s 2026 tax handbook says no local income tax is authorized by statute. Cities and counties receive a share of the state tax: 6.47% of net collections from individuals, trusts and estates, divided by population.

An Illinois return starts with your federal adjusted gross income (AGI), copied from line 11a of the 2025 Form 1040. You add certain items, such as federally tax-exempt interest and dividends, and subtract others, such as Social Security, qualified retirement income and Illinois income tax refunds, to reach Illinois base income. Instead of a standard deduction, Illinois subtracts an exemption allowance from base income, and 4.95% of what is left, your net income, is the tax before credits.

The exemption allowance, which IDOR also calls the personal exemption, is $2,850 per person for 2025 and $2,925 for 2026: one for you, one for your spouse on a joint return and one for each dependent. Add $1,000 for each of you who was 65 or older, and $1,000 for each who was legally blind. No exemption at all is allowed if federal AGI is over $250,000, or over $500,000 on a joint return, and someone who can be claimed as another person’s dependent gets one only if their Illinois base income is no more than the exemption amount.

For example, a single resident with $60,000 of federal AGI, no other adjustments and no dependents has $57,075 of net income for 2026 after the $2,925 exemption, and owes $2,825 before credits, about 4.7% of AGI. For 2025 the same income gives $57,150 of net income and $2,829 of tax.

The July 2025 tax law (Public Law 119-21) created federal deductions, for 2025 through 2028, for qualified tips (up to $25,000), qualified overtime pay (up to $12,500, or $25,000 on a joint return), interest on loans for new, U.S.-assembled personal vehicles (up to $10,000) and an extra $6,000 for each person 65 or older. On the 2025 Form 1040 they are figured on Schedule 1-A and subtracted on line 13b, after adjusted gross income on line 11a.

Because the IL-1040 starts from AGI, none of the four deductions lowers your Illinois income, and Illinois has no subtraction of its own for tips or overtime. Tips and overtime pay stay taxable in Illinois at 4.95%, and car loan interest is not deductible. Older filers have Illinois’s own breaks instead: the $1,000 additional exemption at 65 and the subtraction for Social Security and retirement income.

Federal changes that do change AGI generally carry through to Illinois, since the return starts there, but Illinois decouples in places. Form IL-4562 reverses federal bonus depreciation for business owners, and for tax years ending on or after December 31, 2026, Public Act 104-0468 requires individuals to add back gains on qualified small business stock that were excluded federally.

Mostly no. Illinois starts from federal AGI but subtracts, on line 5 of Form IL-1040, the federally taxed part of Social Security and of income from qualified retirement plans, so that income is not taxed in Illinois. There is no age test: IDOR says early distributions from qualified plans and IRAs count too.

Retirees still file. A resident who files a federal return must also file Form IL-1040, even when the subtraction leaves nothing to tax, and attaches a copy of the federal Form 1040 to support it. Other income, such as interest, dividends, capital gains and wages, is taxed at 4.95% after the exemption: for 2026 a married couple who are both 65 or older can have $7,850 of it before any Illinois tax is due.

Credits come off the tax itself. Two are refundable, so any amount above your tax is paid to you: the Illinois Earned Income Tax Credit (EITC), 20% of the federal credit, and the Child Tax Credit built on it. To get either one you must file a return, even if you otherwise would not have to.

The Illinois EITC reaches people the federal credit leaves out. Since 2023 it has been open to filers with an ITIN, and to workers with no qualifying child who are 18 to 24 or 65 and older, ages outside the federal limits. The Child Tax Credit was 20% of the Illinois EITC for 2024 and is 40% from 2025, for a qualifying child under 12 at the end of the year; Section 244 of the Income Tax Act keeps the 40% for later years, 2026 included, with no end date.

As an Illinois resident you file Form IL-1040 if you have to file a federal return, or if you don’t but your Illinois base income is more than your exemption allowance. Part-year residents file IL-1040 with Schedule NR if they had income from any source while a resident or Illinois-source income while not one, and nonresidents file when their Illinois base income is more than their share of the exemption. Anyone with Illinois withholding or estimated payments to get back must file to get the refund.

Everyone files on Form IL-1040, with schedules for the rest: Schedule M for other additions and subtractions, Schedule IL-E/EITC for dependents and the two family credits, Schedule ICR for the property tax and K-12 credits, Schedule CR for tax paid to other states, and Schedule NR for part-year residents and nonresidents. You can e-file through IDOR’s MyTax Illinois site, with tax software or through a tax professional. The IL-1040 also collects Illinois use tax on taxable items you bought for use in Illinois without paying Illinois tax, such as some online purchases, and you must make an entry on that line, zero if you owe none.

Returns for 2025 were due April 15, 2026, and 2026 returns are due April 15, 2027. IDOR grants an automatic six-month extension to file, to October 15, 2026 for 2025 returns and October 15, 2027 for 2026 returns, and a federal extension longer than six months carries over. The extension does not cover payment: tax not paid by April 15 owes interest and a late-payment penalty, so pay what you expect to owe with Form IL-505-I or electronically.

Illinois taxes residents on all their income, wherever they earn it, so work across a state line can mean two returns. Illinois has reciprocal agreements with Iowa, Kentucky, Michigan and Wisconsin: those states do not tax the wages, salaries, tips and commissions of Illinois residents, and Illinois taxes that pay instead. If an employer there withholds its state’s tax anyway, you claim a refund from that state; Illinois will not credit it.

Everywhere else, Indiana and Missouri included, the state where you work can tax what you earn there, and Illinois gives a credit on Schedule CR for income tax paid to another state, or to its cities or counties, on income received while you were an Illinois resident. You must have filed the other state’s required return, and the credit is the smaller of the tax paid there and the Illinois tax on that income, so the two taxes on the same income come to roughly the higher of the two.

In the year you move, you are a part-year resident and file Form IL-1040 with Schedule NR. Illinois taxes everything you received while a resident, from any source, and only Illinois-source income, such as wages for work in Illinois, for the rest of the year. Your exemption is prorated by the share of your base income that Illinois taxes, and 4.95% applies to the Illinois net income that is left.

Residence follows the Illinois Income Tax Act. You are a resident if you are in Illinois for other than a temporary or transitory purpose, or if Illinois is your domicile and you are away only for a temporary purpose. Residence starts when you arrive for other than a temporary purpose or make Illinois your domicile, and it ends when you leave for other than a temporary purpose or establish domicile in another state.

IDOR describes domicile as the place where you live and intend to return to after temporary absences, such as military duty, living abroad, studying in another state or spending winters or summers elsewhere. Temporary absences do not make you a part-year resident.