Illinois Income Tax Rate 2026
Illinois uses a flat income tax rate of 4.95% on all taxable income. For 2026, the personal exemption is $2,925 per filer (up from $2,850 in 2025). The state sales tax rate is 6.25%. A major change for 2026: the state grocery tax has been eliminated. Use the calculators below to estimate your Illinois tax liability.
Illinois Income Tax 2026
Illinois levies a flat 4.95% income tax on all taxable income. There are no graduated brackets; all filers pay the same rate regardless of income level. Illinois provides a personal exemption of $2,925 per filer ($5,850 for joint filers), which reduces taxable income before the flat rate is applied.
Illinois Grocery Tax Change for 2026
Effective January 1, 2026, Illinois eliminated its 1% state grocery tax. Qualifying grocery food and beverages are now exempt from the state sales tax. This is a significant change from prior years when groceries were taxed at a reduced 1% state rate.
However, home-rule municipalities may still impose up to 1% local tax on groceries. Whether you pay any grocery tax depends on your city or county. Check your local jurisdiction for the current local grocery tax rate.
Illinois Sales Tax
Illinois's state sales tax rate is 6.25%. Local jurisdictions add their own rates, with the Chicago area having some of the highest combined rates in the nation (exceeding 10% in some areas). Most grocery food is now exempt from the state portion as of 2026.
OBBBA Conformity - Does Illinois Follow Federal Deductions?
Illinois gives no state benefit for the federal OBBBA tips and overtime deductions. Illinois starts from federal adjusted gross income (IL-1040 line 1), and those deductions are taken after AGI on federal Schedule 1-A, so they never enter the Illinois calculation. Tips and overtime are taxed at the full 4.95% flat rate.
- Tips Deduction: Does not conform. Illinois gives no state benefit for the federal OBBBA tips deduction. IL-1040 line 1 is federal AGI; the tips deduction is figured on Schedule 1-A after AGI (Form 1040 line 13b), so it never enters the Illinois calculation. There is no Schedule M addback (2025 Schedule M line 10 is reserved; IDOR guidance is silent). Tips are taxed at the 4.95% flat rate. Corrected 2026-09-29 from an earlier secondhand 'Schedule M addback' claim.
- Overtime Deduction: Does not conform. Illinois gives no state benefit for the federal OBBBA overtime deduction. IL-1040 line 1 is federal AGI; the overtime deduction is figured on Schedule 1-A after AGI (Form 1040 line 13b), so it never enters the Illinois calculation. There is no Schedule M addback. Overtime is taxed at the 4.95% flat rate. Corrected 2026-09-29.
- Senior Bonus Deduction: Pending guidance. Illinois has not issued specific guidance on the federal OBBBA senior bonus deduction. Pending IDOR clarification. Illinois already fully exempts retirement income, which may reduce the practical impact.
The federal deductions still reduce your federal taxable income. Use our paycheck calculator to see the combined effect on both your federal and Illinois returns.
Illinois Retirement Tax
Illinois fully exempts retirement income from state income tax. Social Security benefits, pensions, 401(k) distributions, and IRA withdrawals are all exempt. This makes Illinois one of the most retirement-friendly states in the nation.