Up to this point, the deductions from your earnings we’ve talked about have been mandatory for everyone in Illinois. But some people might have more money taken from each paycheck. For example, if you pay a share of premiums for health insurance, life insurance or disability insurance through your company, that money will be deducted from earnings. You might also have money subtracted from your paycheck if you contribute to a 401(k), a flexible spending account (FSA) or a health savings account (HSA).
- How large depends on the amount you earn, as well as where you live and work.
- The starting point for your Illinois tax return is your federal adjusted gross income (AGI).
- Most property in Illinois is assessed at 33.33% of its market value, except for farmland.
- The tax rates on this page apply to the 2020 tax season as Illinois hasn’t yet released its rates for the 2021 tax season.
- Any earnings you make in excess of $200,000 will be subject to an additional 0.9% Medicare tax (not matched by your employer).
So if you live in Illinois and work in Iowa, Kentucky, Michigan or Wisconsin, you’ll have to pay tax to your home state. The Illinois K-12 education expense credit can knock up to $750 off of your tax bill if you spent more than $250 on qualified education expenses. We believe everyone should be able to make financial decisions with confidence.
Illinois 2023 Income Tax Brackets by Filing Status
Katelyn has more than 6 years’ experience working in tax and finance. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs. Illinois also has high property taxes when compared with the rest of the country, but at least there is no personal property tax in Illinois. The standard deduction, which Illinois does not have, is a deduction that is available by default to all taxpayers who do not instead choose to file an itemized deduction. When these pensions eat up more property tax dollars, less funding is left for essential services such as schools – unless taxes are increased. State teachers’ pension payments have grown 225% since 2000, now consuming 39 cents of every K-12 education dollar spent by the state in 2022.
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. Illinois collects a state income tax at a maximum marginal tax rate of %, spread across tax brackets. Unlike the Federal Income Tax, Illinois’ state income tax does not provide couples filing jointly with expanded income tax brackets. The state of Illinois requires you to pay taxes if you’re a resident or nonresident that receives income from an Illinois source.
Illinois Gasoline Tax
The 22% rate isn’t applied as a flat rate on the entire $100,000. A tax bracket is a range of income that’s taxed at a specified rate. Importantly, your highest tax bracket doesn’t reflect how much you pay on all of your income. If you’re a single filer in the 22 percent tax bracket for 2024, you won’t pay 22 percent on all your taxable income. You will pay 10 percent on taxable income up to $11,600, 12 percent on the amount over $11,600 to $47,150, and 22 percent above that (up to $100,525). The Illinois marginal tax rate used in our example calculation above on this page is 4.95%.
- Managing your finances in a tax-efficient way requires planning.
- You can save time and money by electronically filing your Illinois income tax directly with the .
- The Education Expense Credit provides a credit to parents who spent over $250 on eligible K-12 education expenses.
- Complete Schedule ICR with your Illinois tax return to claim it.
- On the state level, you can claim allowances for Illinois state income taxes on Form IL-W-4.
That means the money comes out of your paycheck before income taxes do. So while making those contributions will decrease your take-home pay, stashing cash in one of these tax-advantaged accounts means the money will grow tax-free. In the case of the FSA and HSA, your money is there for you to spend on medical expenses. On the state level, you can claim allowances for Illinois state income taxes on Form IL-W-4.
Property Taxes and Property Tax Rates
An alternative is to divide your allowances between the two jobs on the Form IL-W-4 you give to each employer, or you could claim all your allowances with one job and none with the other. If you double-claim allowances while holding more than one job, you’ll owe more money at tax time. If you’re paid more frequently, each of your paychecks will be smaller.
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 illinois income tax rate specific deductions available in Illinois, see the list of Illinois income tax deductions. Illinois state offers a personal exemption and tax credits, such as the earned income tax credit, and education expense credit.
When does the state of Illinois start releasing income tax refunds?
Other types are subtracted, resulting in what Illinois calls your « base income. » Illinois does have a dependent exemption of $2,425 per dependent for 2023. The Equal Pay Act prohibits employers with four or more employees from paying unequal wages to men and women for doing the same or substantially similar work. In addition to the usual liquor, gasoline and cigarette taxes, the state taxes such things as aircraft use, food and beverages, and watercraft use. You can find details on all of them at the Illinois Department of Revenue website. A reduced rate of 1% applies to qualifying food, drug and medical appliances.
Illinois has no state tax on inheritance, but estates are taxed 0.8 percent to 16 percent after a $4 million exclusion. Estate taxes must be paid to the Illinois State Treasurer no later than nine months after one’s death. Even if no tax is due, filing a return is required on all estates of $4 million and above.More information and an estate tax calculator is available at the Illinois Attorney General’s website. If you start now, you can make plans to reduce your 2024 tax bill. Knowing the tax brackets for 2024 can help you implement smart tax strategies, like adjusting your income tax withholding, so you don’t get caught with a big tax bill. Some accounts, like a 401(k), FSA or HSA, allow you to make pre-tax contributions.
In addition, Illinois has what is called an exemption allowance, which is a set amount that nearly anyone who earned a paycheck can knock off their taxable income. The exemption for 2022 is as high as $4,850 for married couples filing jointly https://www.bookstime.com/ ($2,425 for single filers). The amendment also grants lawmakers the ability to tax retirement income at a different rate than regular income, which could allow for rates to rise over time so the hikes generate less unified public opposition.
Instead, the 2024 tax brackets are tied to marginal tax rates. This means that the first $22,000 of income is taxed at a rate of 10%. The next portion of income, which is the amount between $22,000 and $89,450, is taxed at a rate of 12%. Finally, only the income exceeding $89,450 is taxed at a rate of 22%. The idea of not having to pay state income taxes could give you the urge to throw everything in a U-Haul and head for Dallas, but property taxes, sales taxes or other taxes and fees might be higher in those states. Find out about your state taxes—property taxes, tax rates and brackets, common forms, and much more.