Illinois Income Tax Rates for 2025

The Earned Income Tax Credit (EITC) is a significant tax credit in the United States, designed primarily to benefit working individuals and families with low to moderate income. As a refundable credit, the EITC not only reduces the amount of tax owed but can also result in a refund if the credit exceeds the taxpayer’s total tax liability. This makes the EITC a powerful tool for reducing poverty, incentivizing work, and providing financial support to those who need it most. The credit amount varies based on the taxpayer’s income, marital status, and number of qualifying children, with the intention of providing greater assistance to families with children. However, wages, rental income, and other non-retirement earnings remain subject to the 4.95% state tax.

Have Questions About Your Taxes?

You can save time and money by electronically filing your Illinois income tax directly with the . 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. Taxpayers needing more time to file can request an extension, but this does not extend the deadline for tax payments. Any balance owed must be paid by the original due date to avoid penalties and interest. Illinois grants an automatic six-month extension if a federal extension was filed.

Sales & Use Tax

Illinois offers payment plans that allow you to pay in installments over time. Illinois remains one of the few states that does not tax retirement income, including pensions, Social Security benefits, and withdrawals from IRAs and 401(k)s. However, legislators continue to discuss potential modifications to this policy, including the possibility of introducing an estate tax on certain inheritances. While no changes have been enacted for 2025, retirees should stay informed about potential tax reform efforts in the coming years.

Was the Tax Year 2019 Tax Deadline Delayed? What to Know About Coronavirus (COVID- and Your Taxes

You can also pay estimated taxes every quarter to cover your bases with the IRS. If you want more money in your Illinois paycheck, aside from asking for a raise, you can also work overtime if your job allows it. Other forms of supplemental wages you can seek include bonuses, commission, stock options and prizes. Supplemental wages are taxed at the same rate as regular income in Illinois. Taxpayers 65 or older and those who are legally blind receive an extra exemption of $1,000 each.

These agreements allow credits for taxes paid to other states, potentially reducing Illinois tax liability. For example, taxes paid on Illinois-sourced income to another state may qualify for a credit. Understanding state tax obligations is essential for individuals and businesses operating in Illinois. Knowing whether you need to file a state tax return helps prevent legal issues and ensures compliance with local regulations. This is particularly important due to the variety of residency situations and income sources that influence filing requirements. This calculator provides estimates based on current tax rates and standard deductions for Illinois.

1 – Illinois Standard Deduction

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. If you paid $1,000 in property taxes in 2024, you could claim a credit of $50 on your income tax return, which equates to $50 less that you end up paying in taxes. We’ll help you get Illinois-specific deductions and credits you qualify for to keep more money in your pocket. From earned illinois state tax income income tax credits to property tax credits, we’ll guide you every step of the way to maximize your refund.

Late filing incurs a penalty of 2% of the unpaid tax if the return is filed within 30 days after the deadline, increasing to 10% thereafter. If a taxpayer fails to pay the full amount due, an additional late payment penalty of 1% per month applies until the balance is settled. For higher education savings, Illinois offers a deduction for contributions to the state-sponsored Bright Start and Bright Directions 529 plans. Taxpayers can deduct up to $10,000 per year ($20,000 for married couples filing jointly) for contributions to these accounts. Unlike federal 529 plans, which provide tax-free withdrawals for qualified education expenses, Illinois’ deduction applies only to contributions, not earnings. Understand Illinois state tax rules, including filing requirements, rates, deductions, and payment options to ensure compliance and maximize potential savings.

• Both companies produce multiple editions for simple to very complex tax returns, so be sure to carefully compare the features offered by each package.
• Knowing whether you need to file a state tax return helps prevent legal issues and ensures compliance with local regulations.
• Illinois does not have standard and itemized deductions, nor do they use the federal standard deduction amounts.
• A bigger paycheck may seem enticing, but smaller, more frequent paychecks can make it easier to budget without coming up short by the end of the month.
• The state of Illinois has a flat income tax, which means that everyone, regardless of income, is taxed at the same rate.

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 normal balance Illinois income tax deductions. This means that no matter how much money you make, you pay that same rate. Sales and property taxes in Illinois are among the highest in the nation.

• The Illinois Education Expense Credit provides a tax break for educational costs for qualifying dependents.
• Use these free tax calculator tools and get immediate answers to many of your personal tax questions.
• This new version no longer asks you to list total allowances, as it instead uses a five-step process that lets you enter personal information, claim dependents and indicate any additional income or jobs.
• Following the federal student loan forgiveness initiatives, Illinois has clarified that forgiven student loans will not be considered taxable income at the state level.
• 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.

Additional option to pay

This tool is freely available and is designed to help you accurately estimate your 2025 tax return. Below is a table of the general merchandise sales tax rates for all of the counties in Illinois. Illinois has an estate tax, with the exemption being $4 million, which is lower than the 2025 and 2024 federal estate tax exemptions of $13.99 million and $13.61 million, respectively. That means estates that do not owe federal estate tax may still https://dev1.sentientgeeks.us/climb-forum/2022/06/27/amortization-vs-depreciation-what-s-the-difference-2/ owe Illinois estate tax, at rates as high as 16%.