Illinois Tax Law
Taxes are a burden for every citizen of Illinois. They help pay for government services, special programs and infrastructure improvements. While paying taxes may be a civil duty, it can still be financially challenging for many. Any failure to pay your taxes may result in fines or other penalties that may impact you, your family and your job.
Whether you live in Chicago, Decatur or Springfield, you’ll need to account for the various state and federal taxes in your budget, including everyday sales and gasoline taxes. It can be easy to get lost in all of the taxes you’ll owe. LawInfo’s Illinois tax law articles can help you become familiar with the various taxes to avoid penalties.
Illinois Income Tax Rates
Illinois is one of eight states that charges a flat personal income tax rate for all taxpayers regardless of their income or filing status. Its personal income tax rate is 3.75 percent of a taxpayer’s net income.
For taxpayers whose employers pay withholding (payroll) taxes on their behalf, the rate is also 3.75 percent. Withholding taxes are also applied to state lottery winnings for payments of more than $1,000.
Taxpayers who own a corporation must pay a business income tax rate of 5.25 percent.
Illinois Sales and Use Taxes
Illinois’s state sales and use tax rate is 6.25 percent for goods and services. A use tax is imposed on goods and services that were purchased outside of Illinois and shipped to or sold in the state. Use taxes are also imposed when goods or services purchased in one Illinois municipality are used in another municipality. Municipalities may set higher local sales and use taxes.
Illinois Sin Taxes
“Sin” taxes are levied on consumer products like alcohol and tobacco. They act as additional sales taxes (a.k.a. excise taxes) for products or services that are culturally perceived as vices. Sin taxes are meant to dissuade consumers from purchasing or using the taxed products or services without making them illegal.
Illinois’s sin taxes include:
- $0.099/cigarette or $1.98/pack of 20 cigarettes.
- $0.30/ounce of moist snuff tobacco products.
- 36 percent of the wholesale price of other tobacco products.
- $0.231/gallon of beer/cider with 0.5 to seven percent alcoholic content.
- $1.39/gallon of non-beer alcohol with 14 percent or lower alcoholic content.
- $1.39/gallon of any alcohol with an alcoholic content between 14 and 20 percent.
- $8.55/gallon of any alcohol with 20 percent or higher alcoholic content.
While customers of adult entertainment and gaming facilities may not need to directly pay sin taxes or state surcharges, operators of these facilities may pass the costs of the specific surcharges imposed on their businesses through increased admission fees. Any gambling winnings are subject to a withholding tax of 3.75 percent.