Illinois State Income Tax: Rates, Who Pays in 2023-2024

Food, drugs and medical appliances are all subject to a statewide tax rate of 1% of purchase price, in addition to local taxes of up to 1.25%, for a total tax of up to 2.25%. There are some food items that don’t count as a qualifying food. For example, candy and soda are generally subject to the higher “general merchandise” rate, but any candy containing flour is not, for sales tax purposes, classified as candy. illinois tax brackets Qualified education expenses over $250 are eligible for a tax credit. The Personal Exemption, which is supported by the Illinois income tax, is an additional deduction you can take if you (and not someone else) are primarily responsible for your own living expenses. Likewise, you can take an additional dependent exemption for each qualifying dependent (like a child or family member), who you financially support.

Benefits of e-Filing your Illinois tax return include instant submission, error checking, and faster refund response times. Most tax preparers can electronically file your return for you, or you can do it yourself using free or paid income tax software, like the examples listed below. Illinois’ maximum marginal income tax rate is the 1st highest in the United States, ranking directly below Illinois’ %. You can learn more about how the Illinois income tax compares to other states’ income taxes by visiting our map of income taxes by state. Chairman Kevin Brady, and Senate Finance Committee Chairman Orrin Hatch. This framework provided a broad outline to reduce business and individual taxes but left many details up to the tax-writing committees to determine later.

Income Exemption Allowance for Illinois

Technically, you don’t have just one “tax bracket” – you pay all of the Illinois marginal tax rates from the lowest tax bracket to the tax bracket in which you earned your last dollar. For comparison purposes, however, your Illinois tax bracket is the tax bracket in which your last earned dollar in any given tax period falls. Income tax deductions are expenses that can be deducted from your gross pre-tax income. Using deductions is an excellent way to reduce your Illinois income tax and maximize your refund, so be sure to research deductions that you mey be able to claim on your Federal and Illinois tax returns. For details on specific deductions available in Illinois, see the list of Illinois income tax deductions. Taxpayers whose federal adjusted gross income exceeds $250,000 ($500,000 for married couples filing jointly) are not eligible to claim this tax benefit.

Among the most important items that are taxable federally but not in Illinois are retirement and Social Security income, as well as distributions from a 529 college savings plan. In addition, Illinois has what is called an exemption allowance, which is a set amount that most people who earned a paycheck can knock off their taxable income. The exemption for 2023 is as high as $4,850 for married couples filing jointly ($2,425 for single filers). For tax year 2023, estates worth less than $4 million are exempt.

Your 2023 Federal Income Tax Comparison

The IRS issued these numbers late last year through news releases and publications, of which the highlights are summarized below. Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations. Income from Illinois sources if your adjusted gross income is higher than your Illinois exemption allowance. The TCJA improved the U.S. tax code, but the meandering voyage of its passing and the compromises made to get it into law show the challenges of the legislative process. As policymakers contend with the expirations that resulted from the TCJA’s compromises, they should consider the advantages of permanent, stable policy, and the compromises that it will take to get there. The Byrd Rule says reconciliation legislation must be budget-related and cannot include non-budget changes even if they come with ancillary budget consequences.

It represented a shift away from the more visionary approach of the 2016 House GOP blueprint, and instead largely remained within the confines of the existing income tax system. As simple as Illinois tries to make income tax, the state seems to take the opposite approach with sales taxes. There are three rate structures depending on what you are buying.

Total Estimated 2023 Tax Burden

While the reconciliation process offers an easier route to passing a bill, it also comes with restrictions. Deductible mileage rates for the 2024 tax year have also changed, and are summarized in the following table. Let us know in a single click, and we’ll fix it as soon as possible.

• Illinois also has higher-than-average sales taxes and property taxes.
• Using deductions is an excellent way to reduce your Illinois income tax and maximize your refund, so be sure to research deductions that you mey be able to claim on your Federal and Illinois tax returns.
• Reconciliation means a bill cannot be filibustered in the Senate and can pass with a simple majority, rather than being subject to the 60-vote threshold.
• The 2.23% effective property tax rate in Illinois is second-highest in the nation, behind only New Jersey.
• In general, the rate ranges from 6.25% to over 8.50%, depending on where the vehicle is purchased.

The general merchandise sales tax applies to almost all other products purchased for use in Illinois. However most areas have additional local taxes between 0% and 5.25%. Cook, Kane and Warren counties are home to the state’s highest combined sales tax rates of 11.50%, 11% and 11%, respectively. To e-file your Illinois and Federal income tax returns, you need a piece of tax software that is certified for eFile by the IRS. While most in-depth tax software charges a fee, there are several free options available through the states, and simple versions are also offered free of charge by most tax software companies.

Illinois — Single Tax Brackets

These reduce a taxpayer’s total tax bill by some amount, which is in contrast to tax deductions, which only reduce a taxpayer’s taxable income. For example, the Illinois Property Tax Credit is equal to 5% of Illinois property tax paid on a principal residence for single filers with an AGI of $250,000 or less and joint filers with AGI of $500,000 or less. If you paid $1,000 in property taxes in 2023, you could claim a credit of $50 on your income tax return, which equates to $50 less that you end up paying in taxes. Congress made the individual tax cuts (and the accompanying revenue offsets) temporary and large rather than permanent but scaled back.

Remember that Illinois may have very different deduction laws from the Federal Income Tax, so you may have to write a whole new list of deductions for your Illinois income tax return. Below is a table of the general merchandise sales tax rates for all of the counties in Illinois. You may qualify for the federal EITC/EIC if your adjusted gross income (AGI) is under $63,398 (actual threshold varies by filing status and number of dependents). Head over to the Federal income tax brackets page to learn about the Federal Income Tax, which applies in all states nationwide.