Illinois · State and Local Tax (SALT) Deduction
State and Local Tax (SALT) Deduction in Illinois (2026)
Deduct combined state income taxes (or sales taxes) and local property taxes up to the 2026 SALT limit. 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: $40,400.
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
Taxpayers who pay state income, sales, or property taxes
- Must itemize
- State/local income OR sales tax
- Property taxes on real estate
- $40,400 combined cap for most filers ($20,200 MFS)
Federal forms: Schedule A
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: Exceeding the SALT cap; Including foreign taxes here.
Frequently asked questions
How much can the State and Local Tax (SALT) 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 $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 State and Local Tax (SALT) Deduction in Illinois?
Taxpayers who pay state income, sales, or property taxes. The federal rules are the same in every state; the requirements are: Must itemize; State/local income OR sales tax; Property taxes on real estate; $40,400 combined cap for most filers ($20,200 MFS). Illinois filers should confirm on the IL return whether the state follows the federal treatment.
Which forms do I file to claim the State and Local Tax (SALT) Deduction?
Federal: Schedule A. Illinois: check the Illinois Department of Revenue instructions for the matching state schedule. Common mistakes: Exceeding the SALT cap; Including foreign taxes here.
State and Local Tax (SALT) Deduction in other states
- Full State and Local Tax (SALT) Deduction guide (all states)
- State and Local Tax (SALT) Deduction in Kentucky
- State and Local Tax (SALT) Deduction in Alabama
- State and Local Tax (SALT) Deduction in Arkansas
- State and Local Tax (SALT) Deduction in California
- State and Local Tax (SALT) Deduction in Georgia
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.