STATE RANKING #37

Tax Facts: 

-The State of Illinois has both Corporate income tax and personal income tax rates with maximum rates of 4.95% and 7.00%, respectively. Businesses have additional taxes such PPTR and a Franchise Tax. Read more below.

4.95%

State Income Tax

State
Income
Tax

7.00%*

Cost of Setting Up A Business

state
business
tax

HIGH

Property
Taxes

9.08%

Sales
Tax (average)

State Income Taxes in Illinois

The state of Illinois is one of a few states with a flat individual income tax. Similar to states such as Colorado and UtahIllinois’ individual tax rate is a percentage of your Federal Adjusted Gross Income, which is only 4.95%.

State Business Taxes in Illinois

The state of Illinois has two different types of Business taxes. A flat Corporate Income Tax and a Personal Property Replacement Tax (PPRT). The flat Corporate tax rate is 7.00% and is assessed only on C Corporations. The PPRT is assessed as follows: 

  • C-Corporations2.5% on Net Income
  • Flow-thru entities (LLCs, S-Corp, etc) – 1.5% on Net Income

*Franchise Tax in Illinois

In addition to the Corporate & PPTR tax, Illinois also has a franchise tax. The franchise tax is assessed on the capital assets of the business. The tax rates are 0.15% for the first year in business, and 0.10% for every additional year in business. There is a minimum tax of $25 per year. Currently there are plans to eliminate the franchise tax by 2024.

Sales Taxes in Illinois

Like most states, Illinois has both a state and local sales tax. Its state sales tax is 6.25% and it’s local sales tax has an average rate of 2.83% (which puts the state average at 9.08%). Illinois has the 6th largest sales tax rate in the country.

Property Taxes in Illinois

The average property tax rate for residential property in the state of Illinois is 2.05%, which is well above the national average. In fact, Illinois is the 2nd most expensive state regarding property tax as a percentage of value in the country (behind New Jersey).

Unemployment taxes in Illinois

Unemployment taxes usually consist of three factors. They are: the wage base, the range of UI rates, number of schedules. Below is an outline of the three:

  • Wage Base – Illinois has a wage base of $12,960
  • UI Rates – range from 0.48% to 6.80%
  • Schedules – Illinois has a single rate schedules regarding UI

Illinois Business Entities - LLCs

Illinois is one of the more expensive states in regards to opening an LLC. Here are some important facts:

  • Illinois’ annual LLC fee is $75 a year
  • When you register with the state, you pay a one time fee of $150
  • Secretary of State of Illinois website – click here
  • If you would like help setting up your LLC, we recommend using IncFile.com. They are simple and easy to use.

State #36

State #38