Taxes in Illinois: Features and Advantages

Main Taxes in Illinois

Income Tax

Illinois levies a flat income tax of 4.95% for all income levels.

Sales Tax

The base sales tax rate in Illinois is 6.25%. In some areas, local taxes can raise this rate up to 11%. The tax applies to the sale of goods and certain services.

Use Tax

If you purchase goods online or outside Illinois without paying Sales Tax, you are required to pay Use Tax, which has the same rate — 6.25%.

Determining the taxable base and applicable rate can be complex and requires professional expertise.

We provide services for obtaining a Sales Tax Certificate, as well as preparing and filing Sales and Use Tax Returns. We advise business owners on registration, calculation, and reporting.

Property Tax

The average property tax rate in Illinois is 2.11% of housing value, one of the highest rates in the country.

Business Taxes

For companies in Illinois, the corporate income tax rate is 9.5%, including:

• 7.0% — state corporate income tax
• 2.5% — personal property replacement tax (PPRT)

This rate is one of the highest among all states. It applies to C corps, and partially to S corps and LLCs through PPRT.

Illinois also levies a franchise tax for corporations, which will be fully repealed by 2027 but is still partially in effect.

An Annual Report is required for both Corporations and LLCs. If you encounter difficulties with filing the Annual Report or Franchise Tax, we provide services for preparing and filing these reports.

Excise Taxes

Illinois levies excise taxes on goods such as alcohol, tobacco, and fuel. These vary depending on the category of goods.

Favorable Tax Conditions in Illinois

• Flat income tax rate — does not depend on income level, which benefits high earners.

Taxes in Illinois Compared to Other States

• One of the highest corporate income tax rates for C corps among all states.
• Highest property tax rates in the country.
• Among the highest sales tax rates. Complex taxation system by counties, with high rates in Chicago.
• Relatively low income tax rate compared to other states — 4.95% (for example: California — 13.3%, New York — 10.9%).