Illinois State Income Tax in 2025: A Guide

Illinois makes filing state income taxes straightforward with its flat tax rate of 4.95% for all individual taxpayers. Unlike states with complex tax brackets that increase rates based on income, Illinois’s flat tax system applies the same percentage to every taxpayer, simplifying calculations and filing.  

For those who live in Illinois or earn income from the state, this predictable tax structure removes much of the guesswork from tax season. In contrast, states like California implement a tiered system, with tax rates that climb as income rises, sometimes breaking into the double digits for the highest earners.  Whether you’re an Illinois resident or only earned income in the state, understanding its straightforward approach is key for filing your 2024 return (the taxes you’ll file in 2025).

*Note you are still responsible for federal taxes if you meet the IRS income filing threshold. This article addresses state-specific taxes only.

Who has to file Illinois state income tax?

In Illinois, you must file a state income tax return if you meet any of the following criteria: 

• Illinois residents: You are required to file Form IL-1040 (the Illinois Individual Income tax return form) if: 
• You filed a federal income tax return 
• Your Illinois base income exceeds your exemption allowance (the income you can exclude from taxation for yourself, your spouse, and dependents), even if you’re not required to file federally. 
• Part-year residents: You must file if you earned income while a resident, if you earned income from Illinois sources when not a resident, or if you are due a refund for any Illinois Income Tax withheld. 
• Nonresidents: Filing is necessary if you have taxable income from Illinois sources or seek a refund of Illinois Income Tax withheld in error. 
• Residents of Iowa, Kentucky, Michigan, or Wisconsin: If you worked in Illinois and received income other than wages (such as gambling winnings), or if you want a refund of Illinois income tax withheld, you must file.

What is Illinois’ standard deduction?

Illinois does not have a standard deduction for state income tax purposes. Instead, Illinois offers a personal exemption to reduce taxable income. In Illinois, an exemption allowance is a specific amount deducted from taxable income for each taxpayer (including you and a spouse) and dependents, directly reducing the amount subject to tax.  

This is different from a standard deduction, which is a fixed amount that reduces taxable income, available to all taxpayers regardless of dependents.  

For the 2024 tax year, Illinois offers a personal exemption allowance of $2,775 per individual, totaling $5,550 for married couples filing jointly.  

Taxpayers 65 or older and those who are legally blind receive an extra exemption of $1,000 each. You also may qualify for exemptions for each dependent, further lowering taxable income. 

Certain high-income taxpayers in Illinois are not eligible for the exemption allowance. If your federal adjusted gross income (AGI)—your total income for the year, including wages, interest, dividends, and other earnings minus specific deductions like student loan interest or certain retirement contributions—exceeds these thresholds, you won’t qualify for an exemption. 

• Married filing jointly: No exemption allowance if federal AGI exceeds $500,000. 
• Single, head of household, married filing separately, or widowed: No exemption allowance if federal AGI exceeds $250,000. 

Source: Illinois Department of Revenue

Other income tax considerations in Illinois

In Illinois, how you earn your income affects how the state taxes it. Here are some income tax considerations to be aware of: 

• Retirement and pension income: Retirement income—including pensions, 401(k), individual retirement accounts (IRAs), and certain annuities—is generally exempt from Illinois state income tax. Subtract federally taxed retirement income from your AGI when filing Illinois taxes.  
• Investment income: Capital gains, dividends, and interest income are taxed at Illinois’s flat 4.95% individual income tax rate, just like other taxable income. 
• Social Security income: Social Security benefits are fully exempt from Illinois state taxes. Subtract any federally taxed benefits from your AGI.  
• Military income: Active duty and retirement pay for military service are exempt from Illinois state taxes. Specific eligibility requirements apply.

Common Illinois state tax credits

Illinois offers several tax deductions and credits that can reduce your taxable income or lower your tax liability. Here’s a quick overview of key options. 

Tax credit	Description	Amount
Earned Income Tax Credit (EITC)	For working families with income under $66,819; based on the number of qualifying children.	Up to $1,566.
Education Expense Credit	25% of qualified student expenses above $250. Credit is capped regardless of the number of qualified students.	Up to $750.
Property Tax Credit	Credit for property taxes paid on your principal residence.	Up to 5% of taxes.
Volunteer Emergency Worker	For volunteer fire/emergency workers. Requires application and approval.	$500 nonrefundable.

For more details, review the Illinois Department of Revenue’s full list of individual income tax credits.

How to file Illinois state income tax

Filing your Illinois state income tax doesn’t have to be overwhelming. Whether you’re a full-year resident, part-year resident, or nonresident, TurboTax is here to help simplify the process. 

We’ll help you get Illinois-specific deductions and credits you qualify for to keep more money in your pocket. From earned income tax credits to property tax credits, we’ll guide you every step of the way to maximize your refund. Looking for extra support? Connect with a TurboTax expert for personalized tax advice or to handle filing for you. We make filing your taxes stress-free and accurate every time.