Why IL flat tax helps high earners
An IL software engineer making $180K pays the same 4.95% rate as a $50K teacher — no graduated bracket. That's $8,910/year in state tax vs. roughly $14,000 in California at the same income.
Chicago property tax reality
Cook County property tax averages 2.1% of assessed value — among the highest in the US. A $500K Chicago condo can carry $10K+ in annual property tax, partially offsetting the flat-tax advantage.
IL has no local income tax
Unlike NY (NYC) or PA (Philadelphia), Illinois cities can't levy their own income tax. Chicago workers pay only the 4.95% state rate, period.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
Does Illinois tax retirement income?
No. IL exempts Social Security, pension income, and 401(k)/IRA distributions from state income tax — one of the most retiree-friendly states in the Midwest.
Are bonuses taxed differently in IL?
IL withholds bonuses at the same flat 4.95% rate as regular wages. Federal supplemental withholding (22%) still applies separately.
What is the IL personal exemption?
IL allows a $2,775 personal exemption per filer plus per dependent (2026). It phases out at high incomes — single filers above $250K lose the exemption entirely.
For a city-specific version of this, see the NYC paycheck calculator.
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