Illinois Income Tax Brackets for Tax Year 2022 Filed April 2023

Arizona joined the growing list of states with a flat individual income tax structure, one year earlier than originally anticipated. 1828, tax triggers were established that set the state on a course to a 2.5 percent flat rate subject to reaching specified revenue targets. Unlike the federal government and many other states, Illinois does not have tax brackets that impose higher rates on people who earn more. Effective January 1, 2025, Mississippi will implement several tax changes impacting individual taxpayers and businesses. The state will reduce the flat individual income tax rate to 4.4 percent, down from 4.7 percent in 2024.

Tax Data Sources:

Likewise, residents of Iowa, Kentucky, Michigan and Wisconsin who work in Illinois are not required to file an Illinois state income tax return unless they earned certain Illinois non-wage income, such as lottery winnings. Illinois does not have tax brackets, so calculating your rate should be pretty simple. If you have a dollar or $1 billion that is subject to Illinois income tax, you owe 4.95% of that money to the state. This receipts factor will be calculated based on the accounting method (either cash or accrual basis) employed by the taxpayer for the relevant taxable year. Rhode Island has amended its net operating loss carryforward period from five to 20 years, effective January 1, 2025. This change will improve the state’s corporate income tax competitiveness by bringing the state’s NOL tax treatment into better alignment with the NOL provisions in other states.

• Among the most important items that are taxable federally but not in Illinois are retirement and Social Security income, as well as distributions from a 529 college savings plan.
• Cook, Kane and Warren counties are home to the state’s highest combined sales tax rates of 11.50%, 11% and 11%, respectively.
• If someone else can claim you as a dependent, and you have your own income.
• Illinois Income Tax did not increase for Tax Year 2024, with a constant tax rate of 4.95%.
• Mississippi moved to a flat individual income tax structure as a result of H.B.
• This combination of Self-Employment taxes and the state income tax constitutes the tax liability for LLC members in Illinois.

State Tax Changes Taking Effect January 1, 2024

Many states now follow the federal government in allowing carryforwards for an indefinite number of years but capped at 80 percent of liability in any given year. Connecticut is the first state to provide more than 20 years of carryforwards without the annual utilization limit. Arizona SB 1131 from 2023 abolished city transaction illinois income tax brackets 2023 privilege taxes on residential rental property being rented out for 30 days or more, commonly called the rental tax, effective in 2025. This tax varies by municipality with an average of 2.5 percent of monthly rent bills. Cities, towns, and other jurisdictions are then prohibited from levying a tax or fee on renting or leasing real property for rental purposes.

Remember to subtract any applicable deductions to arrive at your final taxable income. Of those states taxing wages, eleven have single-rate tax structures, with one rate applying to all taxable income. Conversely, 30 states and the District of Columbia levy graduated-rate income taxes, with the number of brackets varying widely by state. Kansas, for example, is one of several states imposing a three-bracket income tax system. Top marginal rates range from Arizona’s 2.5 percent to California’s 13.3 percent. By temporary proviso, the FY 2025 budget lowered the state’s top marginal individual income tax rate for tax year 2024 by an additional 0.1 percentage points, to 6.2 percent, ahead of the statutorily scheduled reduction in 2025.

State Tax Changes Taking Effect January 1, 2025

• The Maine Supplemental Budget also provided for refunds to firms that paid sales tax on qualifying TPP purchases between January 1, 2023, and December 31, 2024.
• Iowa and Louisiana will transition to single-rate income taxes, continuing a recent trend of states adopting flat income taxes.
• SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you.
• The exemption for 2022 is as high as $4,850 for married couples filing jointly ($2,425 for single filers).
• Food, drugs and medical appliances are all subject to a statewide tax rate of 1% of purchase price, in addition to local taxes of up to 1.25%, for a total tax of up to 2.25%.

The Personal Exemption, which is supported by the Illinois income tax, is an additional deduction you can take if you (and not someone else) are primarily responsible for your own living expenses. Likewise, you can take an additional dependent exemption for each qualifying dependent (like a child or family member), who you financially support. Technically, you don’t have just one “tax bracket” – you pay all of the Illinois marginal tax rates from the lowest tax bracket to the tax bracket in which you earned your last dollar.

Illinois Married (separate) Filer Tax Tables

Further, to partially offset the costs to retailers of complying with sales tax collection and remittance laws, Illinois allows retailers to retain 1.75 percent of sales taxes collected. However, beginning January 1, Illinois will cap the retailers’ discount on sales due at $1,000 per month. Illinois also has high property taxes when compared with the rest of the country, but there is no personal property tax in the Prairie State. Qualifying deductions might include an itemized deduction, the Illinois standard deduction, exemptions for dependants, business expenses, etc.

Nevada will increase its unemployment insurance taxable wage base, effective January 1, 2025, from $40,600 in 2024 to $41,800 after January 1, 2025. The new law will also allow a full first-year deduction for research and development expenditures. Minnesota’s cigarette excise tax will increase beginning January 1, 2025, from 73.9 cents per pack to 78.6 cents per pack. California’s Emergency Telephone Users Surcharges are determined by the California Governor’s Office of Emergency Services annually. Beginning January 1, 2025, the 911 Surcharge will increase from $0.30 to $0.41 per access line. The revenues fund the infrastructure and administration of the 911 emergency communication system.

Illinois: Federal FICA Rates in 2023

Also, you will find links to other important Illinois income tax return information and other related features (e.g. tax extension, amendment, etc.). North Carolina’s Omnibus Alcoholic Beverage Control bill, SB 527, changed the state’s alcohol regulation and taxation regime in several ways. The part of the bill that takes effect January 1, 2025, creates an exemption from the 30 percent excise tax on spiritous liquor when sold for at least $50,000 per container. The state enacted S3432 to create the Next New Jersey Program to encourage the development of artificial intelligence investments. The state will award up to $500 million in tax credits to businesses that invest a minimum of $100 million in capital for business facilities dedicated to artificial intelligence.

Social Security Fairness Act

When filing an income tax return in Illinois, taxpayers begin with their federal taxable income. From there, certain items may be added back in, and others may be subtracted. Among the most important items that are taxable federally but not in Illinois are retirement and Social Security income, as well as distributions from a 529 college savings plan.