📅 2026 Update: Changes in Illinois State Tax Landscape

Since the original article was published, several key changes have occurred in Illinois state tax laws and related developments across the U.S. The landscape of pass-through entity taxes (PTET) has expanded, with many states introducing similar legislation. This update will explore those changes and how they relate to Illinois taxes.

More details from the earlier article follow below.

🌍 New PTET Legislation in Other States

Several states have adopted pass-through entity taxes since 2023. This trend reflects a growing recognition of the benefits of this tax model. States like Hawaii, Iowa, and Indiana have implemented PTET laws similar to Illinois.

These changes could impact businesses operating in multiple states.

  • 🌟 Kentucky: Passed a PTET law on March 24, 2023. This aligns its tax framework with Illinois, providing businesses with similar options.
  • 🌟 Nebraska: Enacted its PTET law on May 31, 2023. Like Illinois, this aims to simplify taxation for pass-through entities.
  • 🌟 West Virginia: Introduced a PTET on March 28, 2023, further expanding the trend across the region.

📄 Current Forms and Filing Procedures

The forms for tax filings have remained consistent, but users should be aware of their specific purposes.

  • 📋 Form 3911: For taxpayers who have not received their refund, this form allows you to request a trace.
  • 📋 Form 1065: Partnerships are required to file this form to report their income and deductions to the IRS.

⏰ Updated Processing Times

Processing times for tax forms can vary and often depend on the IRS center handling them. It’s important to check the IRS website for the most current information.

  • ⌛ Form 3911: Processing times are variable; check the IRS site for updates.
  • ⌛ Form 4506: This form’s processing also varies, so refer to the IRS site for specifics.

📌 Key Points Summary

  • 🌟 States are adopting PTET laws similar to Illinois, with significant changes across the U.S.
  • 📋 Forms like Form 3911 and Form 1065 continue to be essential for taxpayers in Illinois.
  • ⏰ Processing times for tax forms may vary; always check for the latest updates.

💡 Tips for Managing Your Illinois State Taxes

It is important to review your specific situation with your attorney to ensure compliance with tax laws.

📝 Stay Informed About State Tax Changes

Keep an eye on any changes in state tax laws. New legislation can affect your tax obligations and benefits. This awareness will help you stay compliant and make informed decisions.

🗓️ File Forms on Time

Ensure that you file necessary forms like Form 1065 by the due date. This form is generally due on the 15th day of the third month after your partnership's tax year ends. Late filings may incur penalties.

📞 Use Available Resources

Consider utilizing the IRS Free File program if you meet the eligibility criteria. This program offers free tax preparation and filing services, which can save you time and money.

👥 Seek Free Assistance

If you need help, look for local Volunteer Income Tax Assistance (VITA) programs. They provide free tax help to individuals who qualify, making it easier to navigate your tax situation.

💡 Understand Your Rights

Familiarize yourself with the Taxpayer Bill of Rights. Knowing your rights can help you navigate disputes and ensure fair treatment by tax authorities.

🏆 Tax Services Ranked by User Reviews (2026)

The following services provide various tax-related solutions, fitting the theme of Illinois state tax matters. The order is based on Trustpilot data from October 2026, where scores can fluctuate, and reviews may vary. Keep in mind that star ratings are just one indicator of service quality.

🥇 1. SMAART Tax

SMAART Tax has been rated 4.4. This service is known for offering virtual tax solutions across all 50 states. It primarily operates online, which may limit in-person consultation options for some users.

🥈 2. KBO Tax & Accounting Services

KBO Tax & Accounting Services holds a Trustpilot score of 4.5. It provides nationwide tax preparation and bookkeeping services. Limited in-person office locations can be a drawback for customers seeking face-to-face assistance.

🥉 3. Jackson Hewitt Tax Service

Jackson Hewitt Tax Service averages 4.2. Its extensive network of locations nationwide makes it convenient for many. However, some customers have reported issues with customer service responsiveness.

4️⃣ Libre Tax Service

Libre Tax Service has a Trustpilot score of 4.1. Known for online tax preparation and IRS audit defense, some users have noted difficulties with website navigation, which could impact their overall experience.

5️⃣ TaxSlayer

TaxSlayer has an average score of 4.0. It focuses on online tax preparation software at affordable prices. Users have reported occasional software glitches that may affect the ease of filing.

6️⃣ Advanta Tax

Advanta Tax averages 4.3. This service is recognized for its nationwide tax solutions and assistance with IRS resolutions. Some clients have experienced delays in service, which can be a concern when time is critical.

🆓 Free Tax Help Options

There are several free options available for those needing assistance:

  • IRS Free File offers free preparation and filing services for eligible taxpayers.
  • VITA provides free tax help for individuals needing assistance in preparing their returns.

🔎 Considerations When Choosing Tax Services

  • 📊 Check customer ratings and reviews to gauge service quality.
  • 📍 Evaluate the availability of in-person consultations based on your needs.
  • 💰 Consider pricing structures for different services.
  • 🔍 Look into their specialties, like audit defense or business tax needs.

❓ Frequently Asked Questions

❓ What is a pass-through entity tax?

A pass-through entity tax allows income from entities like partnerships and LLCs to "pass through" to owners without being taxed at the entity level. Illinois has adopted this model.

💼 How do I file Form 1065?

Form 1065 must be filed by partnerships to report income, deductions, and other information. It is typically due on the 15th day of the third month after the partnership's tax year ends.

📅 When should I file my taxes in Illinois?

Tax returns in Illinois are generally due on April 15, unless extended. Be aware of any changes to deadlines that may arise.

🏦 Are there penalties for late tax filing?

Yes, Illinois imposes penalties for late tax filings. It's essential to file on time to avoid unnecessary fees and interest charges.

📞 How can I get free tax assistance in Illinois?

You can access free tax help through programs like VITA and the IRS Free File program if you qualify. These resources can guide you through the filing process.

📚 Where can I find more information about state taxes?

For more information on Illinois state taxes, visit the official Illinois Department of Revenue website. They provide resources on tax rates, forms, and filing procedures.

⚖️ Recent Court Cases Related to Illinois State Tax

Recent court rulings have addressed various tax issues relevant to Illinois state tax laws. These cases can influence how taxes are interpreted and enforced in the state.

For more insights into recent rulings, visit the more rulings on the news page.

End of October 2026 Update





Illinois State Tax: What You Need To Know

Illinois is one of the few states in the US that has a state tax. For many taxpayers, understanding Illinois state tax seems to be a daunting task. We all know that paying tax is not one of the most exciting things to do, but it is important to grasp a basic understanding of Illinois state tax requirements.

In this article, we’ll outline everything you need to know about Illinois state tax, including rates, deductions, and a few tips to help you manage your state tax obligations efficiently.

What Is Illinois State Tax?

Illinois State Tax

Illinois state tax is a personal income tax levied by the state of Illinois on the income of its residents. It is a progressive tax, which means the tax rate increases as the taxable income increases. The revenue generated from this tax is generally used to fund various public services such as healthcare, education, public safety, and infrastructural developments.

Who Must Pay Illinois State Tax?

If you live or work in Illinois, you are required to pay state income tax on your earnings. This applies to all individuals, businesses, trusts, and estates that generate an income in the state.

Residents must also file state tax returns if they have an annual income of $2,275 or more, and non-residents who have earned an income of $1,000 or more in Illinois are also required to file. However, there are a few exemptions that apply. For instance, if you’re under 18 years of age, your annual income is less than $9,000 or if you’re exempt from filing a federal tax return, you’re not required to file a state income tax return.

What Are The Illinois State Tax Rates?

Illinois has a flat tax rate system of 4.95%. This means that all residents pay the same tax rate, regardless of their income level. The tax is calculated based on the net income of an individual, which is the total income received after deductions and exemptions are subtracted.

Illinois State Tax Deductions

To calculate your tax liability, you are allowed to make a variety of deductions. Here are some of the most common deductions for Illinois state income tax:

Standard Deduction: For single and married taxpayers (filing separately), the standard deduction for tax year 2020 is $12,400. The standard deduction for heads of households and married taxpayers (filing jointly) is $24,800.

Dependency Exemption: Taxpayers are allowed up to $2,325 per dependent exemption.

Retirement Income Deduction: Seniors receiving retirement income from Social Security are eligible for a retirement income deduction. The deduction is equal to the lesser of $6,000 or the total amount of Social Security benefits received during the tax year.

Charitable Contributions: Donations made to charitable organizations or churches can be deducted up to the amount of the donation.

Note that there are many other deductions available, such as healthcare, property taxes, life insurance premiums, and more. It's essential to keep track of all your deductions throughout the year to ensure you receive the maximum deductions on your Illinois state tax return.

📝 See Also

Illinois State Tax Forms

To file your Illinois state tax return, you’ll need to use either Form IL-1040 (Individual Income Tax Return) or Form IL-1040-SR (Senior Citizens and Persons with Disabilities).

Form IL-1040 is used by most Illinois taxpayers to report their annual income and calculate their tax liability. If you are married filing jointly, you and your spouse will need to file a joint return.

Form IL-1040-SR is used exclusively by senior citizens or persons with disabilities who have a qualifying gross income of $75,000 or less single and $100,000 or less for those married filing jointly.

Both forms can be found on the Illinois Department of Revenue (IDOR) website. The forms can be completed either online or printed out and mailed to the IDOR.

When Are Illinois State Taxes Due?

Illinois state taxes are due on April 15th, the same date as federal taxes. Late taxes are subject to penalties and interest.

There is a six-month extension available for filing your Illinois state tax return, but this does not extend the deadline for tax payments.

How To Pay Illinois State Tax?

Once you’ve filed your return and determined your tax liability, you have several payment options to choose from. You can pay your Illinois state taxes online, via phone, or by mail.

Electronic Payment Options: Illinois taxpayers can make their state tax payments through the state's electronic payment system called ePay. You will need your bank routing number and checking account number to make a payment electronically.

Credit or Debit Card: Credit and Debit card payments can be made through third-party service providers authorized by the Illinois Department of Revenue.

Mail: Illinois state tax payments can also be mailed by check or money order. Mail your payment to Illinois Department of Revenue, P.O. Box 19014, Springfield, IL 62794-9014.

Important Changes to Illinois State Tax Law

In July 2019, Governor J.B. Pritzker signed the Illinois Taxation and Budget Reform Commission Act into law. The law mandates the formation of a commission, which will be responsible for reviewing and making recommendations on changes to the Illinois tax system.

The primary focus of the commission will be to evaluate state taxes on income, capital gains, and retirement income. The commission will also consider issues related to the corporate income tax and estate tax.

One significant change to Illinois state tax law is the switch from a flat tax rate to a graduated tax rate, also known as a progressive tax system. This change is scheduled to take place on January 1, 2023.

Illinois residents will vote on a proposed constitutional amendment that would allow for the adoption of a graduated tax system on November 3, 2020. The amendment proposes new income tax rates for taxpayers with different income levels, with higher earners facing a higher tax rate.

If the amendment is passed, the following income tax rates will go into effect on January 1, 2021:

| Income | Tax Rate |

| -----------|-----------|
| $0-$10,000 | 4.75% |
| $10,001-$100,000 | 4.90% |
| $100,001-$250,000 | 4.95% |
| $250,001-$500,000 | 7.75% |
| $500,001+ | 7.99% |

If the amendment is not passed, the current flat tax rate of 4.95% will remain unchanged.

Final Words

Paying state income tax in Illinois is not a choice, but it is something that we all have to do. However, understanding the basics of Illinois state tax can help you save money and make your tax obligations easier to manage. Remember to keep track of your deductions, and to file your Illinois state tax return on time and efficiently.

Always stay informed about any changes in Illinois state tax laws to avoid any penalties, and talk with a tax professional or attorney for additional guidance as needed.

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.