Fact-Check: Are Chicago Residents Among the Nations Most Taxed?

In Illinois, small businesses may be required to pay various types of business taxes normal balance depending on their structure, location, and activities. Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more. The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement. Illinois also has a 66.5 cents per gallon gas tax rate and a $2.98 cigarette excise tax rate. The State of Illinois collects $7,379 in state and local tax collections per capita.

• 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.
• But Bhatti pointed to Chicago suburbs like Evanston and Oak Park that are financially stable and growing in population despite having significantly higher property taxes than Chicago.
• However, the owners or members of the corporation must report their share of the corporation’s income on their personal tax returns and pay Illinois and federal income tax.
• So while making those contributions will decrease your take-home pay, stashing cash in one of these tax-advantaged accounts means the money will grow tax-free.
• So, while you might be saving on income tax, you might be shelling out more in other areas.
• These contributions are typically made pre-tax, and you can lower your taxable income, save on taxes, and invest in your future at the same time.

Alex NitkinGovernment Finance and Accountability Reporter

Illinois provides a standard Personal Exemption tax deduction of $ 2,625.00 in 2024 per qualifying filer and qualifying dependent(s), this is used to reduce the illinois income tax rate amount of income that is subject to tax in 2024. 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 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.

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That makes it relatively easy to predict the income tax you will have to pay. The income tax rate in Illinois is 4.95%, after an increase from 3.75% in 2017. As with an S corporation, a standard LLC is a pass-through entity that doesn’t have requirements about paying federal income tax. Business income is actually distributed to the various individuals who are members of the LLC. The state of Illinois requires more than this, however, as the LLC itself must pay personal property replacement tax rated at 1.5% of its net income.

• In the absence of allowances, filers are required to enter annual dollar amounts for things like income tax credits, non-wage income, itemized and other deductions and total annual taxable wages.
• Aliens are further classified as ‘resident’ aliens and non-resident aliens.
• Illinois also has a 6.25 percent state sales tax rate and an average combined state and local sales tax rate of 8.86 percent.
• A hypothetical Chicago family consisting of two working parents and one school-aged child earning $25,000 faces the fifth-highest tax burden among those 51 jurisdictions.
• If your business meets these criteria, it’s essential to comply with Illinois sales tax regulations.
• Qualifications include being 65 and older and having a household income of no more than $65,000.Contact your county assessor for information about exemptions and your county treasurer for information about deferrals.

Illinois Gasoline Tax

Our enhanced efforts to protect Illinois taxpayers from identity theft and tax fraud have proven to be highly successful. We will continue to combat the criminals attempting to steal your identity to file fraudulent tax returns while making every effort to get your tax refund to you as quickly as possible. Lori Lightfoot, a former federal prosecutor vying to become Chicago’s next mayor, has repeatedly argued that high taxes are driving lower income families out of the city.

How Much Does the Illinois Income Tax Hurt?

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. Illinois’ maximum marginal income tax rate is the 1st highest in the United States, ranking directly below Illinois’ %. You can learn more Bookkeeping for Painters about how the Illinois income tax compares to other states’ income taxes by visiting our map of income taxes by state.