Income Taxation in Illinois

The modern Illinois Constitution, adopted in 1970, sets forth a non-gradual structure where every individual pays the same base tax rate of 4.95 percent. This current rate of 4.95 percent was adopted by the General Assembly in 2017 and implemented beginning in 2018, up from the previous 3.75 percent.

While different rate structures cannot be applied to different income groups, the General Assembly has the power to alter the base rate.The chart below illustrates previous rates:

Previously Proposed Income Brackets From Failed Graduated Income Tax Amendment

Public Act 101 – 0008 would have reformed Illinois tax structure by moving from a flat tax rate, where everyone pays the same regardless of income, to a gradual structure where the tax would vary depending how much income you make. The chart below illustrates the newly proposed tax rates and brackets.

How Other States Tax Income

Thirty-two states of the fifty in the Union use a graduate structure of taxation. The number of brackets and rate of taxation vary by state because each State Legislature has the ability to set their own rates and brackets. Additionally, the District of Columbia uses a gradual structure of taxation to tax income. Seven states do not tax income.

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