Illinois State Taxes: What You’ll Pay During the 2026 Tax Season

Illinois has a flat income tax but relatively high sales and property taxes, which contribute to the state being rated as less competitive than its neighbors, according to the Tax Foundation.

The big picture:

• Income tax: 4.95 percent flat tax.
• Property tax: Effective tax rate of 1.88 percent of assessed value, according to the Tax Foundation.
• Sales tax: 6.25 percent statewide sales tax plus varying local sales tax rates. The average local tax rate is 2.71 percent, bringing the average combined state and local rate to 8.96 percent, according to the Tax Foundation.

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How is income taxed?

The state has a 4.95 percent flat tax, which is assessed based on net income, defined as total wages and income minus standard or itemized deductions.

What about investment income?

Investment income, with a few exceptions — such as certain distributions from money market trusts (mutual funds) — is taxed as part of a resident’s net income at the 4.95 percent flat rate. More information is available here.

Are Social Security benefits taxed?

Illinois does not tax Social Security benefits.

How is property taxed?

Property taxes are assessed at the county level, and they range from 0.83 percent in Hardin County to 2.28 percent in Winnebago and Kendall counties, according to the Tax Foundation’s most recent numbers. The statewide effective rate is 1.88 percent, according to the Tax Foundation. The lowest median rate paid was $869 in Pulaski County, while the highest was $8,923 in Lake County.

What about sales and other taxes?

• Sales tax: The state has a 6.25 percent statewide sales tax, and counties and cities can assess sales taxes on top of that. The average local tax rate is 2.71 percent, bringing the average combined state and local rate to 8.96 percent. Exemptions: Newspapers, feminine hygiene products, groceries and dietary supplements are exempt from sales tax ­— although local municipalities may impose a 1 percent sales tax on groceries. Sales of prescription medications and medical devices are taxed at a lower 1 percent rate. The full sales tax matrix is available here.
• Gas and diesel: Gasoline is taxed at 48.3 cents per gallon, and diesel is taxed at 55.8 cents per gallon.
• Vehicle tax: Purchases from a dealership are subject to the state’s 6.25 percent sales tax, plus any local sales tax based on where the vehicle is registered. For example, Chicago and Cook County have their own taxes imposed, which are listed here. Illinois‘ tax on private vehicle purchases varies depending on the purchase price or fair market price of the automobile, as well as local taxes, which vary by city and county. If the purchase price is less than $15,000, the state tax rate ranges from $100 to $465, depending on the age of the vehicle. If the purchase price is $15,000 or more, the state tax ranges from $850 (for cars priced up to $19,999.99) to $10,100 (for vehicles priced at $1 million or more). Residents can calculate their tax rate here.
• Alcohol: Alcohol for purchase at a restaurant or bar is subject to combined state and local sales taxes. Alcohol purchased for off-site consumption is also subject to the Illinois sales tax of 6.25 percent, plus a local sales tax. Some local governments, such as Chicago and Cook County, may have additional taxes on alcohol.
• Lottery: Lottery winnings are taxed at the state’s flat 4.95 percent income tax rate.

Will my heirs or estate have to pay an estate tax?

Illinois does not have an estate or inheritance tax unless the estate’s gross value exceeds $4 million, at which point the state has a formula for evaluating how much tax is due. More details are available here.

What are the tax breaks for older residents?

• Low-income Senior Citizens Assessment Freeze Homestead Exemption: This exemption “freezes” a property’s assessed value the year an older resident qualifies for it. The property’s assessed value does not increase if qualification for the exemption continues. To qualify for this exemption, residents must be 65 or older and have an income of $65,000 or below. The income limit is set to increase over the next three years to $75,000 in 2026, $77,000 in 2027 and $79,000 in 2028 and beyond.
• Senior Citizens Homestead Exemption: This annual exemption is available for property owners who are 65 and older, living in the residence and paying real estate taxes. The state uses something called equalized assessed value ­— or EAV ­—­ to calculate a property’s value and uses that to determine eligibility. The EAV is a complex formula-based calculation designed to make property taxes fair across different counties. The maximum amount of the reduction in EAV is $8,000 in Cook County and counties contiguous to Cook County, or $5,000 in all other counties. Filing requirements vary by county, and you can learn about them from your county assessor. Contact information for local governments can be found here.
• Standard Homestead Exemption for Veterans with Disabilities: This is an annual reduction in assessed value of the primary residence owned and occupied by a veteran with a service-related disability. The state also uses EAV to determine the benefit amount for this exemption. A qualified veteran who has a service-related disability of 30 to 50 percent will receive a $2,500 reduction in their calculated EAV. If the veteran’s disability ranges from 50 to 70 percent, the annual exemption is $5,000. For veterans with service-related disabilities of 70 percent or more, the first $250,000 of EAV of the home is exempt from being taxed.

Are military benefits taxed?

Illinois does not tax military retirement benefits.