What Are The Illinois Tax Rates In 2025: A Sad Truth Income, Sales, and Property Tax Guide for Residents and Shoppers
Imagine checking your first paycheck at a new job in Illinois, or scanning your grocery receipt in Chicago. Taxes touch every corner of daily life, from small treats to paycheck planning and big leaps like buying a home. Illinois is known for its straightforward flat income tax and mix of local and state sales taxes. But what does this really mean for your wallet or your business? Let’s break down the basics: personal income tax, sales tax, and other key taxes you should know about in Illinois.
Illinois Personal Income Tax Rate
Illinois stands apart with its flat personal income tax of 4.95 percent. Since 2017, this single rate has replaced Illinois’ old structure, bringing simplicity and predictability to every paycheck. Whether you work full-time, have investment income, or receive some pension, understanding how this rate applies can save you unpleasant surprises at tax time.
Flat Rate Structure and History
Illinois switched to the 4.95 percent flat rate in July 2017 after years of moves between rates. Before this, residents saw a 3.75 percent rate from 2015 to 2017 and 5 percent before that. Lawmakers settled on the flat structure for its simplicity and ease of administration. This means every resident pays the same percentage, whether they’re earning minimum wage or running a successful business. The clear math makes filing state returns simpler—one rate for all.
Want to see how this compares to other states? The Illinois Tax Rates & Rankings page from the Tax Foundation lays it out side by side.
Who Pays the Rate and Exceptions
Most Illinois residents, as well as non-residents who earn income in the state, fall under this flat rate. There are some exceptions, thanks to reciprocal agreements with Iowa, Kentucky, Michigan, and Wisconsin. These agreements help workers who commute across borders avoid being taxed twice on the same income. Residents of these states working in Illinois generally owe state income tax only to their home state.
Illinois also features limited exemptions. Social Security benefits, for example, are not taxed at the state level. Most other types of retirement income, like distributions from IRAs, 401(k)s, and some public pensions, are exempt as well.
For a direct, up-to-date rate or to see if your income is taxed, visit the Income Tax Rates – Illinois Department of Revenue resource.
Impact on Different Income Types
Illinois taxes more than just wage income. The flat 4.95 percent rate applies to ordinary income, such as:
- Wages and salaries
- Dividends and interest
- Capital gains and business profits
The state’s exemption for retirement and Social Security benefits benefits older adults and helps retirees stretch their dollars further. This approach sets Illinois apart from states that tax pension or Social Security income.
Illinois Sales Tax Landscape
Shopping in Illinois means another tax—the sales tax. The base statewide sales tax rate is 6.25 percent, but few people pay just that. Most cities and counties add their own sales tax, leading to higher total rates depending on where you shop or dine.
Statewide Base Rate
The 6.25 percent base rate covers most retail goods and some services. It rarely changes, so shoppers can usually expect a consistent starting point at the register.
Local Add-On Rates and Combined Averages
Illinois lets local governments layer on their own sales taxes, leading to a patchwork of rates across the state. These local add-ons can add as much as 4.75 percent. In some parts of Chicago and Cook County, total rates come close to (or even pass) 11 percent. Shoppers in cities like Aurora or Springfield may see lower combined rates.
You can view detailed, current local rates using the Tax Rate Database – Illinois Department of Revenue, which gives rates down to the city block.
Average combined sales tax: About 8.9 percent statewide.
Examples of high local rates:
- Cook County: 10.25 percent (typical)
- Chicago: Can reach just over 10 percent, depending on the district
Special Rates for Food, Drugs, and Vehicles
Illinois doesn’t tax all products at the same rate:
- Groceries and qualifying food: 1 percent (plus a small local addition in some places)
- Prescription and non-prescription drugs: 1 percent (base state rate)
- Vehicle sales: The 6.25 percent base rate, but certain city and county taxes may push the total higher. Vehicles also often face registration and documentation fees.
Here’s a quick-look table for sales tax rates on common purchases:
| Category | State Rate | Possible Local Addition | Example: Chicago Total |
|---|---|---|---|
| Most goods/services | 6.25% | Up to 4.75% | 10.25% |
| Groceries/food | 1.00% | Small additions | 2.25% |
| Prescription drugs | 1.00% | Small additions | 2.25% |
| Cars/vehicles | 6.25% | Local tax possible | 9.5%+ |
Key Additional Taxes in Illinois
Illinois families and businesses feel the pinch of more than just personal income and sales taxes. Other state taxes shape budgets and business decisions across the state.
Corporate Income Tax and Replacement Tax
Illinois businesses pay corporate income tax at a flat 9.5 percent. There’s also a “personal property replacement tax”—a holdover from an older tax on business equipment. Most corporations pay an extra 2.5 percent replacement tax, while partnerships and S corporations pay 1.5 percent. These taxes help fund schools and other local services.
Go deeper on corporate and replacement tax requirements in the Illinois Tax Rates & Rankings section for businesses.
Property Tax and Its Weight
Homeowners in Illinois face some of the highest property tax rates in the nation, with effective rates near 1.9–2.1 percent of home value, according to recent rankings. The bite of property taxes varies a lot based on where you live—a home in suburban Cook County might face a different rate than one in rural southern Illinois. These taxes fund local priorities, such as schools, police, and infrastructure.
Excise Taxes: Gasoline and Cigarettes
Illinois also collects excise taxes on specific items:
- Gasoline: 66.5 cents per gallon (as of 2024), periodically adjusted for inflation
- Cigarettes: $2.98 per 20-pack
Excise taxes often show up in higher prices at gas stations and convenience stores, supporting road maintenance, healthcare, and anti-smoking efforts.
Conclusion
From checking your receipt at a store to reviewing a property tax bill, Illinois taxes impact nearly every spending and saving decision. The flat income tax makes payroll a bit easier to predict, while a mix of local and state sales taxes add a twist to daily shopping. Add in hefty property taxes and targeted excise taxes, and you have a complex web that shapes home budgets, business plans, and retirement dreams.
Understanding these main tax types helps you set smarter household budgets, plan for big purchases, and avoid surprises—whether you’re a lifelong Illinois resident or considering a move. Stay tuned for future changes by checking official Illinois Revenue sources, and keep these rates in mind whenever you set your financial goals.