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Local Income Tax Deduction in Illinois 2026

Calculate your local income tax deduction tax savings in Illinois. With Illinois's 4.95% top state tax rate, your combined savings are higher.

Illinois Tax Overview

State Income Tax
4.95%
flat
Sales Tax
6.25%
avg combined: 8.82%
Property Tax Rate
2.07%
Median Income
$72,205

Flat 4.95% (constitutionally mandated). No standard deduction. Second-highest property taxes (2.07%). Most retirement income exempt.

Illinois Income Tax Brackets (Single)

4.95%
$0 +
Your bracket
$1,348
Est. Total Savings
$10,000
Max Deduction
Itemized
Deduction Type
26.9%
Combined Tax Rate

Local Income Tax Deduction Savings Calculator for Illinois

$
$

Federal Savings

$1,100

22% bracket

Illinois State

$248

4.95% rate

Total Savings

$1,348

26.9% combined

At a 26.9% combined tax rate in Illinois, every $1,000 in deductions saves you $270 in taxes.

Savings by Tax Bracket in Illinois

10%
$748
12%
$848
22%
$1,348
24%
$1,448
32%
$1,848
35%
$1,998
37%
$2,098

Includes 4.95% Illinois state tax on top of federal savings.

Eligibility Requirements

Taxpayers in cities/counties with local income tax

  • 1Part of SALT cap
  • 2Must itemize
  • 3NYC, Philadelphia, etc.

Illinois residents should verify that this deduction is also recognized on their state tax return for additional savings of up to 4.95%.

Common Mistakes to Avoid

  • !Forgetting local tax exists
  • !Not including in SALT calculation
  • !Forgetting to claim the deduction on your Illinois state return (missing up to 4.95% additional savings)

Illinois Filing Tips

With no standard deduction, maximize pre-tax retirement contributions. Property taxes can exceed $10,000 annually. Illinois exempts most retirement income. Focus on property tax reduction strategies.

Required Tax Forms

Schedule A

File these forms with your federal tax return to claim the local income tax deduction. Illinois may require additional state-specific forms.

Other Tax Deductions in Illinois

State & Local Tax (SALT) Deduction

State & Local

~$2,695
est. savings

State Income Tax Deduction

State & Local

~$2,450
est. savings

Sales Tax Deduction

State & Local

~$1,837
est. savings

State Disability Insurance (SDI)

State & Local

~$490
est. savings

Mortgage Interest Deduction

Housing

~$4,287
est. savings

Property Tax Deduction

Housing

~$2,695
est. savings

Home Office Deduction

Housing

~$1,470
est. savings

Home Energy Tax Credit

Housing

~$1,800
est. savings

Local Income Tax Deduction in Neighboring States

Wisconsin

7.65% top rate (progressive)

~$809
-539 vs Illinois

Iowa

3.8% top rate (flat)

~$704
-644 vs Illinois

Missouri

4.8% top rate (progressive)

~$731
-617 vs Illinois

Kentucky

4% top rate (flat)

~$709
-639 vs Illinois

Indiana

3.05% top rate (flat)

~$683
-665 vs Illinois

Tax Calculators for Illinois Cities

ChicagoAuroraJolietNapervilleRockfordElginSpringfieldPeoriaWaukeganChampaign

Calculate Your Full Tax Savings in Illinois

Use our free tax calculators to optimize your entire tax return for Illinois.

Income Tax CalculatorIllinois Income TaxFull Local Income Tax Deduction Guide

Frequently Asked Questions

How much can I save with the Local Income Tax Deduction in Illinois?

In Illinois, the local income tax deduction can save you an estimated $1,348 per year on a $5,000 deduction. This includes $1,100 in federal tax savings and $248 in Illinois state tax savings at the 4.95% marginal rate. The national average savings is $600/year.

What is the Illinois state income tax rate?

Illinois has a flat income tax system with a top rate of 4.95%. Flat 4.95% (constitutionally mandated). No standard deduction. Second-highest property taxes (2.07%). Most retirement income exempt.

Who qualifies for the Local Income Tax Deduction in Illinois?

Taxpayers in cities/counties with local income tax. The eligibility requirements are the same whether you live in Illinois or another state, as this is a federal tax deduction. However, your total savings will vary based on Illinois's 4.95% top state tax rate.

What tax forms do I need to claim the Local Income Tax Deduction in Illinois?

To claim the local income tax deduction, you need to file Schedule A with your federal return. Illinois residents should also check if the state allows this deduction on their state return for additional savings of up to 4.95%. Filing status affects your deduction limits and tax bracket.

Is the Local Income Tax Deduction better in Illinois than in states without income tax?

Yes, Illinois residents benefit more because the state's 4.95% top income tax rate means the deduction reduces both your federal AND state tax liability. In states with no income tax (like Texas, Florida, or Nevada), this deduction only reduces federal taxes. Your combined rate of 26.9% means more savings per dollar deducted.

What is the standard deduction in Illinois for 2026?

Illinois's standard deduction is $0 for single filers and $0 for married filing jointly. With no standard deduction, maximize pre-tax retirement contributions. Property taxes can exceed $10,000 annually. Illinois exempts most retirement income. Focus on property tax reduction strategies.

Related Calculators

State & Local Tax (SALT) Deduction in Illinois

Avg savings: $2,200/year

State Income Tax Deduction in Illinois

Avg savings: $2,000/year

Sales Tax Deduction in Illinois

Avg savings: $1,500/year

State Disability Insurance (SDI) in Illinois

Avg savings: $400/year

Mortgage Interest Deduction in Illinois

Avg savings: $3,500/year

Property Tax Deduction in Illinois

Avg savings: $2,200/year