Personal income tax
The Taxpayer Accountability and Budget Stabilization Act, signed into law on Jan. 13, 2011, increased state income taxes on individuals and corporations and reinstated the Illinois estate tax.
Illinois taxpayers calculate their 2014 state liability by multiplying their income by a flat rate of 5 percent. Effective Jan. 1, 2015, the tax rate dropped to 3.75 percent.
Many Illinois taxpayers may be able to electronically file their state returns by using IL-1040 WebFile.
Residents who cannot use the e-file system or who prefer paper forms can download them from Illinois Revenue.
On June 1, 2014, same-sex marriage became legal across all of Illinois; some counties had allowed same-sex weddings earlier in the year. Same-sex couples who married or converted their civil union to an official marriage on or before Dec. 31, 2014, are considered married for federal and Illinois tax purposes when filing 2014 tax returns.
Illinois' sales tax rate for general merchandise is 6.25 percent.
A reduced rate of 1 percent applies to qualifying food, drug and medical appliances.
Illinois allows several exemptions from tax. Publication 104, Common Sales Tax Exemptions, lists them. For a complete list of exempt transactions, see Illinois Administrative Code Section 130.120.
Effective each January and July, the local government sales tax rates may be adjusted. The latest revised local rates can be found online using the Illinois Tax Rate Finder.
Form IL-1040 includes a line for reporting Illinois Use Tax.
Personal and real property taxes
Only real property (real estate) is taxed in Illinois. The revenue it produces is a major source of income for the state's taxing districts.
The property tax is a local -- not state -- tax imposed by local government taxing districts, which include counties, townships, municipalities, school districts and special taxing districts.
Generally, the property tax cycle is a two-year cycle. During the first year of the tax cycle, the property is assessed reflecting the property value as of Jan. 1 of that year. During the second year, the actual tax bills for the prior assessment year are calculated and payments are collected from property owners (e.g., the tax for the 2014 assessment is paid in 2015).
Most property in Illinois is assessed at 33.33 percent of its market value, except for farmland. Farmland is not assessed on its market value, but on its ability to produce income. Contact the tax assessor's office for exemptions and tax rates.
There are several homestead exemptions available for Illinois homeowners, including the following:
- General Homestead Exemption.
- Senior Citizens Assessment Freeze Homestead Exemption.
- Senior Citizens Homestead Exemption.
- Homestead Improvement Exemption.
- Disabled Veterans' Homestead Exemption
In addition, the Senior Citizens Real Estate Tax Deferral Program allows people 65 years of age and older, who have a total household income of less than $55,000 and meet certain other qualifications, to defer all or part of the real estate taxes and special assessments on their principal residences. The deferral is similar to a loan against the property's market value and a lien is filed on the property in order to ensure repayment of the deferral.
Inheritance and estate taxes
There is no inheritance tax in Illinois.
Illinois estate tax for persons dying in 2014 provides an exemption of $4 million. The estate value exemption for 2014 federal estate tax purposes is $5.34 million. Therefore, tentative taxable Illinois estates with adjusted taxable gifts between $4 million and $5.34 million will owe an Illinois estate tax without any corresponding Federal estate tax liability.
Other Illinois tax facts
Illinois residents who home-school their children can find detailed information about the state's education expense credit in Publication 119.
Illinois collects taxes in more than 50 areas. In addition to the usual liquor, gasoline and cigarette taxes, the state taxes such things as aircraft use, food and beverages and watercraft use. You can find details on all of them at the Illinois Department of Revenue website.