Tax policy in Illinois

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Tax policy in Illinois

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Tax rates in 2014
Personal income tax:  5%
Sales tax:  6.25%
Corporate income tax:  9.5%
Tax revenues in 2013
Total tax collections:[1]  $38.715 billion
Tax collections per capita:[1]  $3,005
Rank:[1]  14
Tax policy in other states
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Illinois generates the bulk of its tax revenue by levying a personal income tax and a sales tax. The state derives its constitutional authority to tax from Article IX of the state constitution.[2][3]

In 2013, according to the Federation of Tax Administrators, Illinois collected $38.715 billion in tax revenues. The state's tax revenues per capita were $3,005, ranking 14th highest in the United States. The single greatest source of tax revenues in Illinois is the state's personal income tax, which accounted for 42.7 percent of total tax collections in 2013.[4][5]

Tax policy can vary significantly from state to state. States levy taxes to help fund the variety of services provided by state governments. Tax collections comprise approximately 40 percent of the states' total revenues. The rest comes from non-tax sources, such as intergovernmental aid (e.g., federal funds), lottery revenues and fees. The primary types of taxes levied by state governments include personal income tax, general sales tax, excise (or special sales) taxes and corporate income tax.[6]

Tax rates

Personal income tax

See also: Personal income tax

Illinois utilizes a flat personal income tax rate of 5 percent in determining an individual's personal income tax liability.[7][8][9]

The table below summarizes personal income tax rates for Illinois and surrounding states in 2014. Numerical rankings are tabulated by excluding states with no personal income tax (as well as New Hampshire and Tennessee, which charge income tax only on dividends and interest) and are based on the highest possible tax rate for which an individual might be liable. Because some states are excluded from the rankings and a few share common uppermost rates, there are 33 numerical rankings, with one indicating the highest uppermost rate and 33 indicating the lowest.[8]

Personal income tax rates, 2014
State Tax rates Number of brackets Brackets Ranking
Lowest Highest Lowest Highest
Illinois 5% 5% 1 Flat rate 25
Indiana 3.4% 3.4% 1 Flat rate 31
Michigan 4.25% 4.25% 1 Flat rate 30
Ohio 0.534% 5.392% 9 $5,000 $200,000 22
Wisconsin 4.4% 7.65% 4 $7,500 $225,000 10
Note: For complete notes and annotations, please see the source below.
Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2014," accessed September 26, 2014

Sales tax

See also: Sales tax

The sales tax rate in Illinois for tax year 2014 is 6.25 percent. The table below summarizes sales tax rates for Illinois and surrounding states in 2014. The table also notes the state's policy with respect to types of items commonly exempted from sales tax (i.e., food, prescription drugs and nonprescription drugs).[5]

Sales tax rates, 2014
State Sales tax rate Exemption status
Food Prescription drugs Nonprescription drugs
Illinois 6.25% 1% (taxed at a reduced rate) 1% (taxed at a reduced rate) 1% (taxed at a reduced rate)
Indiana 7% Exempt Exempt Taxable
Michigan 6% Exempt Exempt Taxable
Ohio 5.75% Exempt Exempt Taxable
Wisconsin 5% Exempt Exempt Taxable
Source: Tax Policy Center, "Sales Tax Rates 2000-2014," June 2, 2014
Illinois is one of

Corporate income tax

See also: Corporate income tax

Corporate income tax is the tax levied by a state on a company's profits. In tax year 2014, Illinois levied a 9.5 percent corporate income tax. The table below lists the corporate income tax rates for Illinois and surrounding states in 2014.[10][11]

Corporate income tax rates, 2014
State Tax rate Brackets Number of brackets
Lowest Highest
Illinois 9.5% Flat rate 1
Indiana 8% Flat rate 1
Michigan 6% Flat rate 1
Ohio N/A1
Wisconsin 7.9% Flat rate 1
Note: For complete notes and annotations, please see the source below.
Source: Tax Policy Center, "State Corporate Income Tax Rates 2002-2008, 2010-2014," June 11, 2014

1Ohio does not levy a corporate income tax for most corporations, but does levy a Commercial Activity Tax. This tax is equal to $150 for gross receipts between $150,000 and $1 million, with an additional 0.26 percent levied for gross receipts over $1 million.[11]

Property tax

See also: Property tax

Most often, property tax applies to real estate, although some states levy property taxes on other types of personal property, such as automobiles. Generally speaking, an individual's property tax liability is determined by the tax rate and the tax base, which is "determined by both the assessed value of the property and ... the share of the assessed value that is subject to tax." To learn more about property tax, including tabulation methods, see here.[12][13][14]

Property taxes comprise the lion's share of local government revenues. In 2010, property taxes accounted for 75 percent of the tax revenues collected by local government entities (such as cities, counties, school districts, etc.). States, on the other hand, generate very little revenue from property taxes. Property tax rates can vary substantially from locality to locality within a state.[12][13]

The table below provides the mean amount of property taxes paid, as well as property tax as a mean percentage of home value, for Illinois and surrounding states for 2012. In terms of mean property taxes paid, Illinois ranked highest when compared to surrounding states.[12]

Mean property taxes paid per state, 2012
State Mean property taxes paid Property tax as a percent of home value
Illinois $4,469 2.28%
Indiana $1,200 0.93%
Michigan $2,347 2.06%
Ohio $2,327 1.77%
Wisconsin $3,530 2.07%
Source: Tax Policy Center, "Residential Property Taxes in the United States," November 18, 2013

The table below lists per capita state and local property tax collections for Illinois and surrounding states for fiscal year 2011. According to the Tax Foundation, which compiled the data below, Illinois ranked 11th in the country in terms of property tax collections per capita.[15]

State and local property tax collections per capita, 2011
State Collections per capita Ranking
Illinois $1,881 11
Indiana $971 37
Michigan $1,374 22
Ohio $1,140 30
Wisconsin $1,724 13
Source: Tax Foundation, "Facts and Figures 2014: How Does Your State Compare?" March 18, 2014

Tax revenues

Tax collections by source as a percentage of total tax collections in 2013.

The table below summarizes general fund revenue sources for Illinois and surrounding states in 2013. All figures are rendered in millions of dollars (for example, $1,500 translates to $1,500,000,000). Per capita figures have not been abbreviated.[16]

General fund revenue sources, 2013
State Sales tax Personal income tax Corporate income tax Other taxes and fees Grand total Per capita revenues
Illinois $7,335 $16,630 $3,086 $9,239 $36,290 $2,817.08
Indiana $6,796 $4,978 $968 $1,720 $14,462 $2,200.92
Michigan $1,832 $5,844 $438 $1,075 $9,189 $928.59
Ohio $8,445 $9,508 $262 $11,344 $29,559 $2,554.62
Wisconsin $4,410 $7,497 $925 $1,254 $14,086 $2,554.62
Source: National Association of State Budget Officers, "State Expenditure Report: Examining Fiscal 2011-2013 State Spending," accessed September 24, 2014

The table below lists tax collections by source as a percentage of total collections for Illinois and surrounding states in 2013.[3]

Tax collections by source as a percentage of total tax collections, 2013
State Property tax Sales tax Select sales (excise) taxes Personal income tax Corporate income tax Other taxes
Illinois 0.2% 21.1% 16.9% 42.7% 11.5% 7.6%
Indiana 0% 40.1% 20.7% 29.4% 4.6% 5.1%
Michigan 7.8% 33.6% 15.3% 32.8% 3.6% 6.9%
Ohio 0% 31.6% 18.3% 36.1% 1% 13%
Wisconsin 0.9% 26.7% 16.2% 43.7% 5.8% 6.7%
Source: Tax Policy Center, "State Tax Collection Shares by Type 2000-2013," June 20, 2014

Tax ballot measures

See also: Taxes on the ballot and List of Illinois ballot measures

Ballotpedia staff have tracked 3 ballot measures relating to taxes in Illinois.

  1. Illinois Ad Valorem Tax Prohibition Amendment (1970)
  2. Illinois Millionaire Tax Increase for Education Question (2014)
  3. Illinois Redemption Periods for Property Sold for Non-Payment of Taxes, Amendment 1 (1990)

Recent news

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Contact information

Illinois Department of Revenue
101 West Jefferson Street
Springfield, Illinois 62702
Phone: 800-732-8866
Website: http://www.revenue.state.il.us/index.htm#&panel1-1

See also

External links

References