How Illinois taxes a paycheck
Illinois has had a flat tax since its income tax began in 1969, and the state constitution requires one; a 2020 ballot measure to permit graduated rates failed. The rate has been 4.95% since July 2017, when it rose from 3.75% to end a two-year budget impasse. It applies to nearly all income from the first dollar, because Illinois has no standard deduction: the only shelter is a $2,925 personal exemption for each filer and each dependent, and even that disappears for single filers above $250,000 of AGI and couples above $500,000.
That structure makes Illinois one of the heavier taxers of modest salaries despite a middling rate. A $60,000 single earner has $57,075 taxed at 4.95%; in Colorado, at a similar 4.4% rate, the same earner has $43,900 taxed. There are no local income taxes in Illinois; Chicago's revenue comes from property, sales and a long list of other taxes, none on wages.
Illinois does exempt retirement income entirely, including 401(k) withdrawals, pensions and Social Security, which is unusual and irrelevant to a wage calculation but explains why the state's tax feels different to retirees than to workers.
How much taxes are taken out of paychecks in Illinois?
On a $60,000 salary in 2026, a single filer in Illinois pays about $5,020 in federal income tax, $4,590 in Social Security and Medicare, and about $2,830 in Illinois income tax, leaving roughly $47,570 a year or $1,829 every two weeks. The state share is 4.7% of gross pay.
A married couple with two children on $100,000 pays about $4,370: four exemptions of $2,925 remove $11,700 and 4.95% applies to the rest. The effective rate barely moves with income, from 4.7% on $60,000 to 4.85% on $150,000, which is the signature of a flat tax with almost no deduction.
Illinois compared with its neighbours
Illinois borders five states, all of which tax wages more gently on a $60,000 salary. Indiana's flat 2.95% takes about $1,740 (before county tax), Iowa's flat 3.8% with the federal deduction takes about $1,630, Missouri about $1,650, Kentucky's 3.5% about $1,980 and Wisconsin's graduated schedule about $1,860. Illinois's $2,830 is the highest of the six.
Indiana's county taxes narrow the gap for people who live across the state line: Lake County, Indiana adds 1.5%, which brings a $60,000 earner's total there to about $2,640, still below Illinois. For St. Louis-area commuters, Missouri's 1% city earnings tax applies only inside the city itself.
Withholding forms and filing status in Illinois
Illinois employers withhold from Form IL-W-4, on which employees claim allowances for themselves, a spouse and dependents at $2,925 each; because the rate is flat, withholding is simply 4.95% of wages above the allowances. Filing status does not change the rate or the exemption per person, so a married couple pays exactly what two singles would on the same combined income, one of the cleanest structures in the country.
Illinois has reciprocal agreements with Iowa, Kentucky, Michigan and Wisconsin: residents of those states who work in Illinois pay only their home state, and Illinois residents working there pay only Illinois. There is no agreement with Indiana or Missouri, so Chicago-area workers living in Indiana and St. Louis-area workers living in Illinois file in both states and take a credit at home.