2023-2024 Tax Brackets and Federal Income Tax Rates

All residents and non-residents who receive income in the state must pay the state income tax. You must pay tax to Illinois on any income you earn there if you work there and live in any other state except Wisconsin, Iowa, Kentucky, or Michigan. Illinois has reciprocity with these four illinois tax brackets states, so residents can cross state lines to work there without worrying about paying income tax to their non-resident state. On top of that state sales tax, local governments can impose their own sales taxes, which can add to the costs of purchases made in different jurisdictions.

In addition, Illinois has what is called an exemption allowance, which is a set amount that most people who earned a paycheck can knock off their taxable income. The exemption for 2023 is as high as $4,850 for married couples filing jointly ($2,425 for single filers). The Illinois Earned Income Tax Credit/Earned Income Credit is for working people with low to moderate income to help reduce the amount of tax they owe. The credit is refundable, which means that if this credit exceeds the tax you owe, it may result in a refund. You can only claim the Illinois EITC/EIC if you qualify for it on your federal income tax return and it’s worth 30% of your federal EITC/EIC. When filing an income tax return in Illinois, taxpayers begin with their federal adjusted gross income (AGI, or taxable income, is income minus certain deductions).

How do Illinois tax brackets work?

The Education Expense Credit provides a credit to parents who spent over $250 on eligible K-12 education expenses. If Illinois could move from ranking second in the nation for high property taxes to 25th or 26th, that would be a massive improvement, Bandoch said. High commercial property taxes, particularly in Chicago, are an undue burden on businesses, Bandoch said.

2025 COLA estimate increases with inflation, but seniors still feel short changed. Certain types of income are added back to your federal AGI on your Illinois return. Other types are subtracted, resulting in what Illinois calls your “base income.”

The Illinois Tax Rate

These reduce a taxpayer’s total tax bill by some amount, which is in contrast to tax deductions, which only reduce a taxpayer’s taxable income. If you paid $1,000 in property taxes in 2023, you could claim a credit of $50 on your income tax return, which equates to $50 less that you end up paying in taxes. The beauty of tax brackets is that no matter which bracket you’re in, you won’t pay that tax rate on your entire income. There are seven income tax rates for the 2024 tax year, ranging from 10% to 37%.