Illinois · the numbers
Illinois figures and what is new for 2026
The Illinois numbers for the 2026 return in one place: the rate, the exemption allowance, the income cliffs, the credits, the 529 subtraction, the estate tax line, the filing and payment dates, and the handful of things that changed since last year. For anyone who files here, and for anyone checking a preparer’s work.
By Charles Trautman, EA
Need to Know Tax · written from Illinois Department of Revenue sources, October 29, 2026; updated November 12, 2026 after the election · not yet reviewed by an Illinois practitioner
Illinois publishes very few numbers because its income tax has very few moving parts: one rate, one exemption figure, two income cliffs, and a short list of credits. What changed for 2026 is modest. The exemption allowance rose $75, the state declined to follow the federal 100% bonus depreciation, the state’s 1% grocery sales tax ended, and the Illinois child tax credit is in its second year at 40% of the state earned income credit. What did not change is the longer list: the rate, the retirement exemption, the credit percentages, the estate tax threshold, and the state’s refusal to match the federal deductions for tips, overtime and seniors.
The core figures
| Item | 2025 | 2026 |
|---|---|---|
| Tax rate, all income | 4.95% | 4.95% |
| Starting point | Federal AGI | Federal AGI |
| Standard deduction | None | None |
| Exemption allowance, per person | $2,850 | $2,925 |
| Additional exemption, 65 or older | $1,000 | $1,000 |
| Additional exemption, legally blind | $1,000 | $1,000 |
| AGI above which the exemption allowance is zero, single / joint | $250,000 / $500,000 | $250,000 / $500,000 |
| Retirement income and Social Security subtraction | 100%, no cap | 100%, no cap |
| 529 subtraction (Bright Start, Bright Directions, College Illinois!), single / joint | $10,000 / $20,000 | $10,000 / $20,000 |
| Local income tax | None | None |
The exemption allowance is the only indexed figure on the return, and it moves in small steps: $2,775 for 2024, $2,850 for 2025, $2,925 for 2026. At 4.95%, each $2,925 exemption is worth $145 of tax. The $1,000 add-ons for age and blindness are fixed in statute and do not move.
The exemption allowance by household
| Household | Allowance | Tax it saves at 4.95% |
|---|---|---|
| Single, under 65 | $2,925 | $145 |
| Single, 65 or older | $3,925 | $194 |
| Married, both under 65 | $5,850 | $290 |
| Married, both 65 or older | $7,850 | $389 |
| Married, two dependent children | $11,700 | $579 |
| Head of household, one child | $5,850 | $290 |
| Any household, AGI over $250,000 single / $500,000 joint | $0 | $0 |
The credits
| Credit | Figure | Refundable? | Income limit |
|---|---|---|---|
| Earned income credit | 20% of the federal EITC | Yes | Federal EITC limits; open to ITIN filers and to childless workers 18–24 and 65+ |
| Child tax credit | 40% of the Illinois EITC, with a child under 12 | Yes | Same as the EITC |
| Property tax credit | 5% of property tax paid on the principal residence | No | AGI $250,000 single / $500,000 joint |
| K-12 education expense credit | 25% of qualified expenses over $250, maximum $750 per family | No | AGI $250,000 / $500,000 |
| Volunteer emergency worker credit | $500 per certificate holder; statewide cap of $5 million, first 10,000 applicants (verify) | No | None |
| Credit for tax paid to another state | Lesser of the other state’s tax or Illinois tax on the same income | No | None |
| Child and dependent care credit | None at the state level |
The two refundable credits are tied to the federal EITC, so they move with the federal inflation adjustments each year. For the 2025 return the federal EITC was available up to $61,555 of earned income single and $68,675 joint with three children, and investment income had to be under $11,950 (verify 2026 figures). The 2026 federal limits will be slightly higher. A worker with three children and the maximum federal credit of about $8,000 (verify) gets roughly $1,600 from Illinois, and if a child is under 12, another $640 on top.
Worked example: what the credits are worth at the cliff
A married couple with two children, one in grade school, a $7,000 property tax bill and $900 of school fees. Compare AGI of $499,000 with AGI of $501,000.
| AGI $499,000 | AGI $501,000 | |
|---|---|---|
| Exemption allowance, 4 × $2,925 | $11,700 | $0 |
| Net income | $487,300 | $501,000 |
| Tax at 4.95% | $24,121 | $24,800 |
| Property tax credit, 5% of $7,000 | −$350 | $0 |
| K-12 credit, 25% of ($900 − $250) | −$163 | $0 |
| Illinois tax | $23,608 | $24,800 |
| Extra Illinois tax on $2,000 more income | $1,192, a 60% state rate |
Of the $1,192, only $99 is the 4.95% tax on the extra $2,000. The rest is the exemption allowance and two credits switching off at once. A deductible IRA or HSA contribution, or a 401(k) deferral, that brings AGI back under $500,000 recovers all of it.
Filing and payment dates
| Date | What |
|---|---|
| January 15, 2027 | Fourth 2026 estimated payment, Form IL-1040-ES |
| April 15, 2027 | Form IL-1040 and payment due; first 2027 estimated payment; extension payment on Form IL-505-I |
| June 15, 2027 | Second 2027 estimated payment |
| September 15, 2027 | Third 2027 estimated payment |
| October 15, 2027 | Extended due date; the extension is automatic, with no form |
Estimated payments are required when the expected Illinois tax after withholding and credits is more than $1,000. The safe harbor is 90% of this year’s tax or 100% of last year’s, paid in four equal, timely installments; there is no 110% tier for higher incomes. Illinois returns can be amended on Form IL-1040-X, and refund claims generally run three years from the due date or one year from payment, whichever is later.
Beyond the income tax
| Item | 2026 |
|---|---|
| Estate tax | Applies when the gross estate exceeds $4,000,000; the exemption is a cliff, not a credit; top rate 16%; no inheritance tax |
| State sales tax, general merchandise | 6.25%, plus local rates; 10.25% in Chicago |
| Grocery sales tax | State 1% ended January 1, 2026; many cities and counties adopted a local 1% in its place; the combined grocery rate cannot exceed the December 31, 2025 rate |
| General homestead exemption (property tax) | $10,000 of equalized assessed value in Cook County, $8,000 in the counties bordering Cook, $6,000 elsewhere |
| Senior citizens homestead exemption, 65+ | $8,000 Cook County, $5,000 elsewhere (verify) |
| Senior assessment freeze, 65+ | Household income $75,000 or less for the 2026 assessment year, billed in 2027; $65,000 through 2025; $77,000 for 2027 and $79,000 from 2028 (Public Act 104-0452) |
| Reciprocal states for wages | Iowa, Kentucky, Michigan, Wisconsin |
What is new for 2026
Exemption allowance, $2,925. Up from $2,850. The withholding tables changed on January 1, 2026 to match.
Bonus depreciation decoupled, again. Senate Bill 1911, signed December 12, 2025 as Public Act 104-0453, keeps Illinois out of the federal 100% bonus depreciation restored by the 2025 federal tax law and out of the new section 168(n) expensing for production property. Business owners, landlords and farmers add the federal bonus back on Form IL-4562 and recover it as regular depreciation over the asset’s life. The same bill made the pass-through entity tax election permanent.
Tips, overtime and the senior deduction: no change, and that is the news. The federal deductions enacted in 2025 are taken after adjusted gross income, so they never reach the Illinois return, and no add-back is needed. Illinois has not enacted any matching deduction. House Bill 1750, which would create Illinois deductions for tips and overtime, has sat in the House Rules Committee since January 2025 (verify). Tips and overtime remain taxable at 4.95%.
Grocery tax. The state’s 1% sales tax on groceries ended January 1, 2026. Cities and counties were allowed to impose their own 1% in its place, and many did, so the practical change depends on where the store is.
Child tax credit, year two. The credit rose from 20% to 40% of the Illinois EITC for 2025 and stays at 40% for 2026.
Medical debt relief subtraction. New on Schedule M, line 18, for 2025 and later: medical debt forgiven under the state’s relief program and taxed federally comes back out of Illinois income.
Date of birth now required. The IL-1040 asks for each filer’s full date of birth on Step 1, line A (verify), which is how the state checks the $1,000 age exemption.
No ballot measure. There was no statewide income tax question on the November 3, 2026 ballot. The flat rate stays in the constitution.
Behind the scenes
The exemption allowance has been indexed to inflation since 2012 (verify), which is why it moves in odd $75 steps, but the indexing was suspended whenever the state’s budget was in trouble, and the $1,000 age and blindness add-ons were never indexed at all. The AGI cliffs at $250,000 and $500,000 date to the 2017 budget that raised the rate to 4.95%; the legislature paired the rate increase with taking the exemptions and the property tax and K-12 credits away from high earners, and left the cliffs as cliffs rather than phase-outs.
The credits with percentages, 20% EITC and 40% child credit, are percentages of federal figures the state does not control, so they rise each year with federal inflation adjustments without any action in Springfield. The credits with flat figures, 5% of property tax, $750 for K-12, $500 for volunteer firefighters, do not move unless a bill passes. None did in 2026.
What to bring
- Last year’s IL-1040, so this year’s figures can be compared line by line
- Dates of birth for everyone on the return
- The property tax bill for the principal residence, with the property index number
- K-12 school fee receipts, by child
- 529 contribution statements from Bright Start, Bright Directions or College Illinois!
- Estimated payment confirmations from MyTax Illinois, with dates
- For a business, farm or rental: the federal depreciation schedule, so the Illinois bonus add-back can be figured
Questions people ask
Did the Illinois income tax rate change for 2026?
No. It is 4.95% on all income, as it has been since July 2017. The rate is flat by constitutional requirement and can only change by an act of the legislature; no bill to change it passed in 2026.
What is the Illinois exemption for 2026?
$2,925 per person, including each dependent, plus $1,000 for each person 65 or older and $1,000 for each person who is legally blind. It is zero if federal AGI is over $250,000 on a single return or $500,000 on a joint return.
Did Illinois adopt the federal “no tax on tips” or “no tax on overtime” rules?
No. Both remain fully taxable in Illinois, and so does the income the federal $6,000 senior deduction removes. Nothing needs to be added back on the Illinois return because those deductions come off after AGI, which is where Illinois starts.
Is the Illinois child tax credit still 40%?
Yes, 40% of the Illinois earned income credit for a family with at least one child under 12, for 2025 and 2026. The Illinois EITC itself is 20% of the federal credit, so the child credit works out to 8% of the federal EITC.
Did the grocery tax really go away?
The state’s 1% did, on January 1, 2026. Any city or county could adopt its own 1% in its place, and many did, including most of the larger ones. Where a local tax was adopted, the rate at the register is the same as before.
Is the estate tax exemption still $4 million?
Yes. Bills to raise it to $6 million for farmland heirs and to $8 million for everyone were filed in the 2025–2026 session; none passed. See The Illinois estate tax.
One rate, one exemption, two cliffs
Know where $250,000 and $500,000 of AGI fall for your household and most Illinois planning is done.
An invitation to Illinois EAs and CPAs
These Illinois pages were written by the editor from the Illinois Department of Revenue’s own publications, and they need an Illinois practitioner’s eye. One enrolled agent or CPA in each Illinois city holds that city’s seat: reads these pages before the filing season and is credited as a reviewer, is named on every page of their city’s edition, and answers its readers’ questions. $1,000 for the 2026 season, the charter price. Take your city’s seat (a two-minute form and a card), tell us you’re interested, write to editor@needtoknowtax.com, or read how it works.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
Questions about this article in Illinois are answered by [your practice name] · [your phone] · [your email address]. We’re looking for an EA or CPA in each Illinois city to hold that city’s seat and take this spot — is that you?
Forms and official pages named in this article
Sources and where to check
- IDOR: IL-1040 instructions, What’s New (2025 return)
- Illinois Comptroller Payroll Bulletin 1-26: 2026 exemption $2,925
- IDOR Bulletin FY 2026-11: grocery tax changes effective January 1, 2026
- BDO: Illinois SB 1911 and the federal 2025 tax law
- Illinois General Assembly: HB 1750 status (tips and overtime deductions)
- IDOR: April 15 deadline, automatic extension and IL-505-I
- Tax Foundation: State individual income tax rates, 2026