Overview of Illinois Taxes
Illinois has a flat income tax of 3.75%. That means that everyone’s income in Illinois is taxed at the same rate by the state Department of Revenue. No Illinois cities charge a municipal income tax on top of the state income tax.
This calculator reflects the 2018 federal withholding tax changes.
Click here to learn more about how the Trump Tax Plan will affect you.
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Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Illinois Paycheck Quick Facts
How Your Illinois Paycheck Works
When you were a teenager you may have had a part-time job (like babysitting) that was paid under the table. In that case, your “paycheck,” whether in the form of a check or cash, was simply your hourly wage multiplied by the number of hours you worked.
But once you start working on the books, calculating your paycheck isn’t that straightforward. Your employer will withhold money from your paycheck, which means you can’t simply multiply your hourly wage by the hours you worked, or divide your annual salary by the number of paychecks you get per year.
For each pay period, your employer will withhold 6.2% of your earnings for Social Security taxes and 1.45% of your earnings for Medicare taxes. Together these are called FICA taxes, and your employer will pony up a matching contribution. Any earnings you make in excess of $200,000 will be subject to an additional 0.9% Medicare tax (not matched by your employer).
You may wish you got a bigger paycheck instead of having FICA taxes withheld, but the taxes are your way of paying into the Social Security and Medicare programs you’ll enjoy when you’re a senior. You’re paying your future self.
Your employer will also withhold money from each of your paychecks to put toward your federal income taxes. The percentage that’s withheld will depend on your income, your filing status (single, married filing jointly, etc.) and the number of allowances you claim on your W-4 form. Claiming more allowances means less withholding. That means each paycheck is bigger, but it could lead you to underpay and leave you with a big tax bill come April.
If you’re paid more frequently, each of your paychecks will be smaller. That’s why pay frequency is a question on every paycheck calculator. A bigger paycheck may seem enticing but smaller, more frequent paychecks can make it easier to budget without coming up short by the end of the month.
In December 2017, President Trump signed a new tax plan into law. The IRS has since released updated tax withholding guidelines and taxpayers should have seen changes to their paychecks, to reflect the new tax plan, starting in February 2018. For the time being, taxpayers do not need to fill out a new W-4. Employers will use the withholdings on your current form.
Up to this point, the deductions from your earnings we’ve talked about have been mandatory for everyone in Illinois. But some people might have more money taken from each paycheck. For example, if your pay toward health insurance, life insurance or disability insurance through your company, that money will be deducted from earnings. Likewise if you contribute to a 401(k), a Flexible Spending Account (FSA) or a Health Savings Account (HSA).
Illinois Median Household Income
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You’ll also claim allowances for Illinois state income taxes, on Form IL-W-4. Your employer will withhold money from each of your paychecks to go toward your Illinois state income taxes. Illinois doesn’t have any local income taxes, so you don’t have to worry about having extra taxes on your earning based on the city you call home or the city where your office is located. If you are thinking of taking a new job and moving to Illinois, check out our Illinois mortgage guide for the ins and outs of getting a mortgage in the Prairie State.
If you have more than one job, you’ll need to split your allowances between your jobs. Say you have two jobs. You can’t claim the same allowances with more than one employer in a single tax year. So, you could divide your allowances between the two jobs on the W-4 you give to each employer. Alternatively, you could claim all your allowances with one job and none with the other. If you double-claim allowances while holding more than one job you’ll owe more money at tax time.
How You Can Affect Your Illinois Paycheck
If you want more money in your Illinois paycheck, aside from asking for a raise, you can also work overtime if your job allows it. Other forms of supplemental wages you can seek include bonuses, commission, stock options and prizes. Supplemental wages are taxed at the same rate as regular income in Illinois.
Sometimes, getting a smaller paycheck pays off. You can set aside more money from getting taxed by making pre-tax contributions to a 401(k), FSA or HSA. While making those contributions will decrease your take-home pay, stashing cash in a tax-advantaged vehicle like a 401(k) means the money will grow tax-free. In the case of the FSA and HSA, your money is there for you to spend on medical expenses and isn’t taxed before it hits your FSA or HSA account.
Some people have a lot of income that comes from non-work sources like investments. If that’s the case, the amount your employer withholds from your paychecks might not be enough, leaving you with a big tax bill. You can always fill out a new W-4 form and request that your employer withhold an additional amount from each of your paychecks. You can also pay estimated tax every quarter to cover your bases with the IRS.
Illinois Top Income Tax Rate
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Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2016 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics