Illinois State Taxes

Illinois Income Tax

Illinois is one of a handful of states that has a flat income tax rate. The current rate is 4.95%, but there are rumblings that the legislation may attempt to change it to a graduated income tax rate moving forward. Governor J.B. Pritzker tried to do just that in 2020, leaving it up to voters to pass a constitutional amendment, but it failed to pass.

Who Must File?

If you are an Illinois resident, you must file an income tax return (Form IL-1040) if you are required to file a federal income tax return, or you are not required to file a federal return but your Illinois base income from Line 9 is greater than your Illinois exemption allowance.

Due to reciprocal agreements, residents who worked in Iowa, Kentucky, Michigan, or Wisconsin must also file and include any income earned in these states.

Part-Year & Non-Residents

Part-year residents must file a return and Schedule NR if any of the following are true:

• You earned income from any source while residing in Illinois,
• While living outside of the state, you earned income from an Illinois source, or
• You want a refund of any Illinois income tax withheld.

Non-residents must also file Schedule NR if they earned enough income through Illinois sources to have a tax liability.

Illinois Sales Tax

Illinois has two rate structures for its sales and use tax. General merchandise is taxed at 6.25% and 1% is levied on foods, drugs, and medical appliances. The sales tax rate may be different in various locations because local jurisdictions are allowed to impose their own sales taxes, too. Local rates are subject to change on January 1 and July 1 of each year.

The average combined sales tax rate (local, county, and state) in Illinois is 8.82%. Several cities have combined sales tax rates of 10.00% or higher.

Illinois Property Taxes

Illinois levies property taxes at the county level. All counties, excluding Cook, assess a property’s value every four years. In Cook County, it is done every three years. This can be problematic in years when the real estate market declines because residents will be taxed on outdated, higher property values.

The median property tax in Illinois is $5,055 annually. Lake County has the highest property tax at an average of $8,609. The lowest amount is $694 in Pulaski County.

Illinois Property Tax

Highest	$8609
Median	$5055
Lowest	$694

Yearly Cost Per Resident

Illinois Tax Holidays

There are no tax holidays scheduled in Illinois at this time.

Illinois Tax Relief

Unresolved Illinois tax obligations can become more challenging over time as penalties and interest increase the amount you owe. The Illinois Department of Revenue (IDOR) may also begin collection efforts when a balance remains unpaid. Whether you’re dealing with unfiled returns, a financial setback, or outstanding business taxes, addressing the issue promptly may give you more opportunities to resolve your account before collections escalate.

If paying your Illinois tax balance in full isn’t possible, you may have options for managing what you owe. Depending on your circumstances and eligibility, you may be able to set up a payment plan or pursue an Offer in Compromise. Working toward a resolution sooner may also help you avoid or address collection actions such as tax liens, wage garnishments, and bank levies.

Understanding how Illinois handles past-due taxes and the relief options available can help you determine the best way forward. Taking proactive steps to resolve your balance can help you bring your tax account into compliance and move beyond your Illinois tax issues.

Common Illinois State Tax Problems

How Illinois Collects Tax Debt

If you do not pay your Illinois income tax in full when due, the state will send you a bill (Notice of Tax Due) detailing your outstanding balance, penalties, and interest.

Failure to pay your overdue income taxes by the due date in the demand for payment will result in an escalation of collection actions. The state may place a lien on your property (enforceable for up to 20 years), garnish your wages, or seize (levy) assets.

Penalties and interest will continue to accrue until your balance is paid in full. Addressing your tax debt as early as possible can help you avoid additional costs and more serious collection actions.

Notice of Tax Due sent to taxpayer

State tax lien filed

Refer account to collections

Illinois State Tax Relief Options

IIllinois offers a few relief options, including:

• Payment Plans – Taxpayers can apply to a payment installment plan if they cannot pay their tax bill in full when due.
• Offer in Compromise – Illinois may consider an Offer in Compromise if paying your tax debt will create a financial hardship. The application is processed by the Board of Appeals and typically takes 12 to 15 months to complete.

If you’re experiencing financial hardship and can’t pay your Illinois income tax bill, contact Taxpayer Assistance as soon as possible to avoid collection actions.

When to Seek Tax Relief Help

If you’re experiencing any of the following, it may be time to explore your tax relief options:

The sooner you address your tax debt, the more options you may have available to resolve your balance and minimize additional collection actions.

Illinois Tax Relief FAQs

How do I set up an Illinois payment plan?

If you have tax delinquencies that you cannot pay due to financial hardship, you can request a payment installment plan.

There are three (3) ways to request a payment plan:

1. Use the pre-approved payment plan option available at MyTax Illinois. Simply select the “Set up a Payment Installment Plan with IDOR” link and complete the online form. Once submitted, you’ll receive a confirmation message.
2. If you are unable to agree to the terms in the process above, you can also request a payment plan through your own MyTax Illinois account. This option requires a review by the IDOR Collections staff. Once complete, the state will let you know if your request is approved or denied.
3. You can also request a payment installment plan by submitting Form CPP-1, Payment Installment Plan Request. If your tax balance is greater than $15,000, you must also complete Form EG-13-1, Financial and Other Information Statement for Individuals. You can fax these forms to (217) 785-2635 or mail to:

Installment Contract Unit
Illinois Department of Revenue
PO Box 19035
Springfield, IL 62794-9035

What happens if I ignore Illinois tax notices?

If you ignore Illinois tax notices and do not pay your back taxes, the state may place a lien on your property and/or refer your account to collections. This may include wage garnishment, bank levies, and seizure of your assets.

Can Illinois garnish my wages for unpaid taxes?

Yes, Illinois can garnish up to 15 % of your gross earnings for unpaid state taxes.

Can Illinois levy my bank account?

Yes. The state can seize your bank accounts (bank levy) to pay back taxes. You should receive a notice 10 days before they issue the levy to your bank.

How long does Illinois have to collect back taxes?

The state of Illinois generally has up to 20 years from the date the tax was assessed to collect the debt. This applies to tax liens and other collection methods. If you never filed or filed a fraudulent return, there is no collection time limit.

Illinois Tax Resources

If you need assistance preparing your Illinois state taxes, you can speak with a tax professional from Tax Defense Network by calling 855-476-6920.

You can also visit the Illinois Department of Revenue website for additional resources.

• Make a Payment
• Where’s My Refund?
• Download Tax Forms
• File a Return
• Taxpayer Assistance: 800-732-8866 or 217-782-3336