FY 2025-16, Whats New for Illinois Income Taxes
For the 2024 tax year, Illinois offers a personal exemption allowance of $2,775 per individual, totaling $5,550 for married couples filing jointly. The 2.11% effective property tax rate in Illinois is second-highest in the nation, behind only New Jersey. That means the typical homeowner in the Prairie State pays 2.11% of their home value in property taxes. The difference between the exemption allowance and the standard deduction is that you can still take it even if you have other subtractions from your income, as mentioned above. With the standard deduction, generally speaking, you have to choose whether to take it or add up your itemized deductions and claim those instead. Your Illinois income includes the adjusted gross income (AGI) amount figured on your federal return, plus any additional income that must be added to your AGI.
Income Tax Brackets, Rates, Income Ranges, and Estimated Taxes Due
Itemized and standard deductions are not allowed in Illinois, which is consistent with the state’s flat tax system. Taxpayers are allowed to claim personal exemptions of $2,375 as of the 2021 tax year—the return filed in 2022. Estimated tax payments are payments of income tax that are required to be paid evenly throughout the year.
Illinois: Federal Retirement Plan Thresholds in 2023
If you (or your spouse if married filing jointly) were 65 or older, check the appropriate box(es). Multiply the number of boxes checked by $1,000 and enter the https://www.bookstime.com/ amount on Line 10b. Illinois’ individual income tax increased from 3.75% to 4.95% on July 1, 2017.
Withholding Income Tax
Illinois also has reciprocity with the neighboring states of Iowa, Kentucky, Michigan and Wisconsin, which means those states don’t tax Illinois residents who work within their borders. So if you live in Illinois and work in Iowa, Kentucky, Michigan or Wisconsin, you’ll pay tax to your home state. The Illinois K-12 education expense credit can knock up to $750 off your tax bill if you spent more than $250 on qualified education expenses. See the instructions for Schedule M to see if you are eligible for other subtractions. To find out if the Illinois Department of Revenue has illinois income tax rate initiated the refund process for your current year refund.
- In addition to the Illinois corporate income tax, Illinois corporations must also pay the federal corporate income tax.
- Dividend income you received, other than business dividend income, is not taxed by Illinois.
- The state’s Schedule M offers a full list of the additions and subtractions that the state recognizes.
- However, if you are filing as a resident or a part-year resident, you may be allowed to take a credit against Illinois Income Tax for income tax you paid to another state.
- If you received a refund from business taxes, you must include any refund you received as a nonresident to the extent that the original deduction was allocated to Illinois.
- Interest income you received while you were a nonresident, other than business interest income, is not taxed by Illinois.
What Income Is Taxable in Illinois
Entities or individuals receiving a pass-through withholding credit or a PTE tax credit receive Schedule K-1-P as a partner or shareholder or Schedule K-1-T as a beneficiary in a pass-through entity. Members may claim credit on their own Illinois income tax return for pass-through withholding reported and paid on their normal balance behalf. Any entity receiving the PTE tax credit that is not itself a pass-through entity, must report the PTE tax credit in the payment section of its own return. If the entity receiving the PTE tax credit is itself a pass-through entity, then the credit is passed through to its members based on each member’s distributive share and reported on Schedule K-1-P or Schedule K-1-T.
Illinois State Taxes: What You’ll Pay in 2025
- Schedule K-1-P(3) and Schedule K-1-T(3) are used to calculate the required tax a pass-through entity must report and pay on behalf of its nonresident members that receive business or nonbusiness income from the pass-through entity.
- Employers in Illinois must withhold state income tax from employees’ wages based on Form IL-W-4, Employee’s Illinois Withholding Allowance Certificate, and remit these amounts to the Illinois Department of Revenue.
- Include earnings distributed from Internal Revenue Code (IRC) Section 529 college savings and tuition programs and ABLE accounts, if these earnings are not included in your adjusted gross income on Form IL-1040, Line 1.
- These extensions do not grant you an extension of time to pay any tax you owe.
Instruction how to only prepare a IL state return on eFile.com and then download, print sign and mail it in. Schedule M, Other Additions and Subtractions for Individuals, allows you to figure the total amount of additions you must include on Form IL-1040, Individual Income Tax Return, Line 3 and subtractions you may claim on Form IL-1040, Line 7. Profit and prosper with the best of Kiplinger’s advice on investing, taxes, retirement, personal finance and much more. Residents of Illinois must pay sales tax on items that are tax-exempt in some other states. Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
- Underpayment can result in penalties based on the amount owed and the number of days late.
- Enter the amount of business expenses you deducted this year for which the related compensation is allocable to Illinois.
- Investment income—such as interest, dividends, and capital gains—is taxable if reported on a federal return.
- According to the Tax Foundation, the average effective property tax rate in Illinois is 1.95%, which is one of the highest rates in the country, and median property taxes are over $5,000.
- If you received income from an Illinois trust or estate, that entity is required to send you an Illinois Schedule K-1-T, Beneficiary’s Share of Income and Deductions.
- On the state level, you can claim allowances for Illinois state income taxes on Form IL-W-4.
- Based on the information provided by the pass-through entity and any other Illinois-based income, you must determine your own Illinois tax liability.
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. For each pay period, your employer will withhold 6.2% of your earnings for Social Security taxes and 1.45% of your earnings for Medicare taxes. Together these are called FICA taxes, and your employer will pony up a matching contribution. Localities can add as much as 4.75%, and the average combined rate is 8.890%, according to the Tax Foundation. A financial advisor can help you understand how taxes may impact your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you.