Graduated Income Tax Proposal Part II: A Guide to the Illinois Plan

illinois income tax rate

Flat tax makes for simplified a tax filing Illinois residents don’t have to figure out complicated state tax tables. Low wage earners can expect to pay more in Illinois than in many other states that have a progressive income tax. The average effective property tax rate of 2.31% in Illinois illinois income tax rate is second highest in the nation, behind only New Jersey. That means that homeowners in the Prairie State on average pay 2.31% of their home value in property taxes. Below is a table of the general merchandise sales tax rates for all of the counties in Illinois and the largest cities.

  • In January 2014, the non-partisan business group Civic Federation of Chicago estimated that the prescribed cut in income tax would yield decreased revenues of $1.4 billion in FY15 growing to $2.7 billion in FY16.
  • Illinois state offers a personal exemption and tax credits, such as the earned income tax credit, and education expense credit.
  • The property tax credit allows individuals or households with an Adjusted Gross Income of $500,000 to receive a credit on their income taxes.
  • Form 1040EZ is generally used by single/married taxpayers with taxable income under $100,000, no dependents, no itemized deductions, and certain types of income .
  • This legislation would take effect on January 1, 2021, if voters approve the constitutional amendment in November 2020.
  • If limited by time, once the time limit is expired, dollars earned will be taxed according to the Income Tax Withholding Table and have “additional alien tax” withheld.

In 2014, according to the Federation of Tax Administrators, Illinois collected $39.183 billion in tax revenues. The state’s tax revenues per capita were $3,042, ranking 15th highest in the United States. The State of Illinois distributes the revenues from this tax to municipalities based on population. Illinois has led the nation in outmigration of residents for five years and this will hasten the movement of businesses and residents out of Illinois.

State Individual Income Tax Rates and Brackets for 2022

Form 1040EZ is generally used by single/married taxpayers with taxable income under $100,000, no dependents, no itemized deductions, and certain types of income . Additional fees apply with Earned Income Credit and you file any other returns such as city or local income tax returns, or if you select other products and services such as Refund Transfer. In order to determine sales tax burden, we estimated that 35% of take-home (after-tax) pay is spent on taxable goods.

The three categories are qualifying food and drugs, vehicles and general merchandise. Qualified education expenses over $250 are eligible for a tax credit. When Illinois’ cannabis legalization effort reaches its full potential with an expansion of licenses available for businesses, the state will bring in $500 million in total tax revenue annually. In Fiscal Year 2021, Illinois already generated $317 million in tax revenues from just 80 licensed adult-use dispensaries, which is more than the state collected in liquor tax revenues ($312 million). Exemptions work by reducing the amount of an individual’s taxable income. Both state and federal taxes allow exemptions.

An Inventory of Local Governments in Illinois: Municipalities

A local 2% tax is issued on the sale of all food and alcoholic and nonalcoholic beverages that are prepared for immediate consumption (which may be consumed on and/or off the premises). The tax supports General Fund operations and the Uptown Renewal Program. The Town of Normal collects a 0.75% tax on titled items sold to residents. Examples of titled items include automobiles, motorcycles and trailers.

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