Illinois taxes every dollar of income at the same 4.95%, whether you earn $30,000 or $3 million. The flat structure is written into the state constitution.
| Gross pay | — |
| Federal income tax | — |
| Social Security6.2% up to $184,500 | — |
| Medicare1.45%, no cap | — |
| State income tax | — |
| 401(k) contribution | — |
| Health and HSA | — |
Useful if you are comparing a job that pays monthly against one that pays every two weeks, or working out what a raise is worth per paycheck.
| Pay schedule | Gross | Take-home |
|---|
Illinois is not flat by policy preference but by constitutional mandate — the state constitution prohibits a graduated income tax. A 2020 ballot measure to remove that restriction and introduce brackets was put to voters and rejected, so 4.95% applies uniformly.
There is no standard deduction. Instead Illinois gives a personal exemption of $2,925 per person, including each dependent, subtracted from income before the rate applies. For a family of four that is $11,700 off the top, which softens the flat rate meaningfully at lower incomes and barely registers at higher ones.
This is the most valuable and least advertised feature of the Illinois tax code. The state exempts virtually all retirement income: Social Security benefits, pension payments, 401(k) and 403(b) withdrawals, IRA distributions.
Very few states are this generous. Most that exempt Social Security still tax withdrawals from retirement accounts. For someone weighing where to retire, this can outweigh the flat rate entirely — an Illinois retiree drawing $80,000 from a pension and a 401(k) pays no state income tax on any of it.
No Illinois municipality levies an income tax, which distinguishes it sharply from neighbouring Ohio, Indiana, Michigan and Missouri, all of which permit local income taxes.
The offset arrives as property tax. Illinois has among the highest effective property tax rates in the United States, and in the Chicago collar counties the annual bill on a modest house can exceed what a middle earner pays in state income tax. Comparing Illinois against a neighbouring state on income tax alone will mislead you.
No. A single 4.95% rate applies to all taxable income. The state constitution prohibits a graduated structure, and voters declined to change that in 2020.
No. Illinois exempts retirement income broadly, including 401(k) and IRA distributions, pensions and Social Security.
No. Chicago levies various other taxes but not an income tax on wages.
$2,925 per person including dependents, deducted from income before the 4.95% rate applies — so roughly $145 of tax saved per exemption.