Illinois State Tax
There are a number of taxes applicable to the state of Illinois, which includes a state sales tax, income tax, and other taxes.
Illinois state sales tax
The state sales tax is different depending on the locality where the sale takes place. There is a 5% state sales tax, with a minimum 1% city and .25% county sales tax. Some cities and counties impose higher taxes that can reach the maximum sales tax of 11.5%.
Illinois personal income tax
- Illinois uses a flat tax rate for calculating income tax for all residents of the state. The flat tax rate is 5%, however it will be decrease over the next 15 years back to 3%.
Illinois property taxes
- Fund local governments but approved by state
- Property tax rates vary depending on the county and type of the property
- The lowest residential property taxes are in Monroe county, with a nominal tax rate of 5.91%
- The highest residential property taxes are in Bond county, with a nominal tax rate of 9.16%
- Commercial property is taxed at the same rate in most counties, however some counties vary the effective tax rate of commercial properties.
Illinois special excise taxes
Taxes assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.
- Funds health programs and other related activities
- $0.98 tax on every pack of cigarettes
- $8.55 tax per gallon of spirits
- $1.39 tax per gallon of wine
- $0.23 tax per gallon of beer
Illinois inheritance tax
The Illinois estate and inheritance tax has just recently been re-entered into law after a hiatus in 2010. The state inheritance tax requires a lower threshold the federal tax, which exempts and estates from taxation until they are over $5 Million in total value. The Illinois inheritance tax will only exempt estates valued under $2 Million, but does allow estate planners to use a Qualified Terminable Interest Property Trust to defer some of that amount. The law is set to expire after 2012, so it is uncertain what the rate will be for years after.
Illinois payroll taxes
State Disability Insurance – None
State Unemployment Insurance – 0.70% - 8.4%
Local Taxes – Chicago requires $4 per month per employee.
Exemptions
Certain exemptions for
- Limited Military personnel and veteran exemptions
- Persons age 65 and older
- Disabled and blind resident tax credits
- Homeowner tax credits
- Qualified child tax credits
Taxable income
Gross income is defined as all income from whatever source derived, including but not limited to:
- Wages
- Salaries
- Commissions
- Stock Gains
- Dividends
- Royalties income
- Rental income
- Business income
- Inheritance
- Pensions
- Annuities
- Partnership/shareholder income
- Gain from sale of property
Corporate income tax
Illinois has a corporate tax rate of 9.5%, which will decrease to 7.3% in 2025.
Misc
Illinois has recently dramatically increased the flat income tax rate from 3% to 5% for the 2011 tax year. It has also dramatically increased the corporate tax rate from 7% to 9.5%. These increases are set to be temporary, as they will decrease a small amount for the next 15 years, until 2025.
Illinois requires a number of taxes for other activities, including utilities taxes, gambling and bingo taxes, aircraft use tax, hotel taxes, watercraft use taxes, automobile taxes, and a number of other licenses and registration fees required throughout the state.
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