Illinois · 401(k) Contribution
401(k) Contribution in Illinois (2026)
Pre-tax 401(k) contributions reduce 2026 taxable wages up to the $24,500 employee deferral limit, with catch-up rules for eligible older workers. Illinois has a flat 4.95% income tax, so a Illinois filer's combined marginal rate on the next dollar at $72,205 of income is about 26.95% (22% federal + 4.95% IL).
2026 savings example for Illinois
Planning estimate for a single filer earning $72,205 (Illinois median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; IL tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$1,348
Federal savings
$1,100
$7,055 → $5,955 · 22% bracket
IL state savings
$248
$3,429 → $3,182 · 4.95% marginal
Combined marginal rate
26.95%
≈ $270 saved per $1,000 deducted
Statutory maximum for this item in LevyIO's dataset: $24,500.
Federal × Illinois marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The IL column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | IL marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 4.95% | 14.95% | $150 |
| 12% | $28,500 - $66,500 | 4.95% | 16.95% | $170 |
| 22% | $66,500 - $121,800 | 4.95% | 26.95% | $270 |
| 24% | $121,800 - $217,875 | 4.95% | 28.95% | $290 |
| 32% | $217,875 - $272,325 | 4.95% | 36.95% | $370 |
| 35% | $272,325 - $656,700 | 4.95% | 39.95% | $400 |
| 37% | Over $656,700 | 4.95% | 41.95% | $420 |
Eligibility & forms
Employees with employer-sponsored 401(k) plans
- $24,500 employee elective deferral limit for 2026
- $32,500 total if age 50+ with regular catch-up
- $35,750 total if age 60-63 and the plan allows the higher catch-up
- Pre-tax contributions reduce taxable wages; Roth 401(k) contributions do not
Federal forms: W-2
Illinois filing notes
Illinois has no broad standard deduction, but the 2026 personal exemption reduces Illinois net income before the 4.95% rate. Verify retirement subtractions on Publication 120, claim Schedule ICR property-tax and K-12 credits when eligible, and use reciprocity rules for IA/KY/MI/WI wage cases.
Common mistakes: Not maximizing employer match; Over-contributing across multiple plans; Treating Roth 401(k) contributions as a current-year deduction; Ignoring payroll year-to-date deferrals after changing jobs.
Frequently asked questions
How much can the 401(k) Contribution save a Illinois taxpayer in 2026?
In LevyIO's example, a single filer with $72,205 of income (the Illinois median household income in our state dataset) who removes $5,000 from taxable income saves about $1,100 in 2026 federal tax (22% marginal bracket) plus about $248 in Illinois tax (4.95% state marginal rate), roughly $1,348 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's IL bracket data, not a survey figure.
What is the Illinois income tax rate for 2026?
Illinois has a flat 4.95% income tax. The IL standard deduction in LevyIO's dataset is $2,925 single / $5,850 married. Flat 4.95% on Illinois net income. No standard deduction, but tax year 2026 uses a $2,925 personal exemption per taxpayer before the rate applies. Most retirement income is subtractable.
Who qualifies for the 401(k) Contribution in Illinois?
Employees with employer-sponsored 401(k) plans. The federal rules are the same in every state; the requirements are: $24,500 employee elective deferral limit for 2026; $32,500 total if age 50+ with regular catch-up; $35,750 total if age 60-63 and the plan allows the higher catch-up; Pre-tax contributions reduce taxable wages; Roth 401(k) contributions do not. Illinois filers should confirm on the IL return whether the state follows the federal treatment.
Which forms do I file to claim the 401(k) Contribution?
Federal: W-2. Illinois: check the Illinois Department of Revenue instructions for the matching state schedule. Common mistakes: Not maximizing employer match; Over-contributing across multiple plans; Treating Roth 401(k) contributions as a current-year deduction; Ignoring payroll year-to-date deferrals after changing jobs.
401(k) Contribution in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.