State Taxes at a Glance – Illinois
|Type of Tax||2022|
|Individual Rates||4.95% (flat tax)|
|Corporate / Business Tax Rates||1.5% to 9.5%|
|Gross Receipts Tax||None|
|Sales Tax||8.81% (average)|
|Property Taxes||2.05% as a percentage of primary home|
|Estate or Inheritance Tax||Yes|
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 Utah, Illinois’ 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% on C Corporations and 4.95% on Trusts and Estates. The PPRT is assessed as follows:
- C-Corporations – 2.5% 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 and Property Taxes in Illinois
Sales Taxes in Illinois – Like most states, Illinois has both a state and local sales tax. Its state sales tax is 6.25% and its local sales tax has an average rate of 2.56% (which puts the state average at 8.81%).
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).
Estate Tax in Illinois
The state of Illinois has an estate tax between 0.8% and 16%. There is an exemption on the first $4,000,000 of the estate.
Illinois DMV Fees
Illinois DMV fees not based on the value of the vehicle, rather they are based on the type of the vehicle and its weight. Therefore, they are not deductible on your individual tax return. The fees include title, registration, document, and plate fees. Here’s a link to the basic Illinois vehicle fees.
Illinois presumption is that it’s your permanent place of abode (domicile) if you’ve lived there for more time than you have in any other state during the year.
State Tax on Social Security Benefits
Even though Illinois has an income tax, social security benefits are not subject to state tax in “The Prairie State.”
Payroll 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 6.88%
- 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