Illinois · Capital Loss Deduction
Capital Loss Deduction in Illinois (2026)
Deduct up to $3,000 of net capital losses against ordinary income per year. 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 $3,000 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
$809
Federal savings
$660
$7,055 → $6,395 · 22% bracket
IL state savings
$149
$3,429 → $3,281 · 4.95% marginal
Combined marginal rate
26.95%
≈ $270 saved per $1,000 deducted
Statutory maximum for this item in LevyIO's dataset: $3,000.
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
Investors with net capital losses
- $3,000 max per year
- Excess carries forward
- Short-term first
Federal forms: Schedule D, Form 8949
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 tracking carryforward; Wash sale violations.
Frequently asked questions
How much can the Capital Loss Deduction 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 $3,000 from taxable income saves about $660 in 2026 federal tax (22% marginal bracket) plus about $149 in Illinois tax (4.95% state marginal rate), roughly $809 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 Capital Loss Deduction in Illinois?
Investors with net capital losses. The federal rules are the same in every state; the requirements are: $3,000 max per year; Excess carries forward; Short-term first. Illinois filers should confirm on the IL return whether the state follows the federal treatment.
Which forms do I file to claim the Capital Loss Deduction?
Federal: Schedule D, Form 8949. Illinois: check the Illinois Department of Revenue instructions for the matching state schedule. Common mistakes: Not tracking carryforward; Wash sale violations.
Capital Loss Deduction 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.