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Health Coverage Tax Credit (HCTC) in Chicago, IL 2026

Calculate your health coverage tax credit (hctc) tax savings in Chicago, Illinois. With Illinois's 4.95% state tax rate, your combined savings are higher.

Illinois Tax Context

State Income Tax
4.95%
Local Income Tax
None
Property Tax Rate
2.1%
Tax Burden
Very High

Very high combined sales tax (10.25%); high property taxes; flat 4.95% state income tax

$5,000
Est. Total Savings
No Limit
Max Deduction
Tax Credit
Deduction Type
26.9%
Combined Tax Rate

Health Coverage Tax Credit (HCTC) Savings Calculator for Chicago

$
$

Federal Savings

$5,000

22% bracket

Illinois State

$0

4.95% rate

Local Tax

$0

0% rate

Total Savings

$5,000

26.9% combined

Tax credits reduce your tax bill dollar-for-dollar, regardless of your tax bracket.

Savings by Tax Bracket in Chicago

10%
$5,000
12%
$5,000
22%
$5,000
24%
$5,000
32%
$5,000
35%
$5,000
37%
$5,000

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

Eligibility Requirements

Trade-displaced workers receiving TAA benefits and PBGC pension recipients

  • 1Must receive Trade Adjustment Assistance
  • 2Or be a PBGC pension recipient aged 55-64
  • 3Covers 72.5% of qualified health insurance premiums

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

  • !Not filing monthly with the IRS for advance payments
  • !Missing open enrollment periods
  • !Not keeping proof of qualifying coverage
  • !Forgetting to claim the deduction on your Illinois state return (missing 4.95% additional savings)

Required Tax Forms

Form 8885Form 1040

File these forms with your federal tax return to claim the health coverage tax credit (hctc). Illinois may require additional state-specific forms.

Other Tax Deductions in Chicago, IL

Medical & Dental Expenses

Medical

~$3,675
est. savings

Self-Employed Health Insurance

Medical

~$6,125
est. savings

HSA Contribution Deduction

Medical

~$2,205
est. savings

Long-Term Care Insurance

Medical

~$2,450
est. savings

Medical Travel Expenses

Medical

~$980
est. savings

Flexible Spending Account (FSA)

Medical

~$1,102
est. savings

Medical Equipment & Devices

Medical

~$1,837
est. savings

Therapy & Counseling

Medical

~$2,450
est. savings

Health Coverage Tax Credit (HCTC) in Other Illinois Cities

Aurora, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Joliet, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Naperville, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Rockford, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Elgin, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Springfield, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Peoria, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Waukegan, IL

4.95% state tax

~$3,200
-1,800 vs Chicago

Calculate Your Full Tax Savings in Chicago

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

Income Tax CalculatorTaxes in ChicagoFull Health Coverage Tax Credit (HCTC) Guide

Frequently Asked Questions

How much can I save with the Health Coverage Tax Credit (HCTC) in Chicago, IL?

In Chicago, Illinois, the health coverage tax credit (hctc) can save you an estimated $5,000 per year. This includes $5,000 in federal tax savings and $0 in Illinois state tax savings. The national average savings is $3,200/year.

What is the Illinois state income tax rate for Chicago residents?

Illinois has a 4.95% state income tax rate. Chicago residents have no additional local income tax. Very high combined sales tax (10.25%); high property taxes; flat 4.95% state income tax

Who qualifies for the Health Coverage Tax Credit (HCTC) in Chicago?

Trade-displaced workers receiving TAA benefits and PBGC pension recipients. The eligibility requirements are the same whether you live in Chicago or elsewhere in the U.S., as this is a federal tax credit. However, your savings amount will vary based on Illinois's 4.95% state tax rate.

What tax forms do I need to claim the Health Coverage Tax Credit (HCTC) in Illinois?

To claim the health coverage tax credit (hctc), you need to file Form 8885 and Form 1040 with your federal return. Illinois residents should also check if the state allows this deduction on their state return, which could provide an additional 4.95% savings. Filing status affects your deduction limits and tax bracket.

Is the Health Coverage Tax Credit (HCTC) better in Chicago than in states without income tax?

Yes, Chicago residents benefit more because Illinois's 4.95% state income tax 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.

Related Calculators

Medical & Dental Expenses in Chicago

Avg savings: $3,000/year

Self-Employed Health Insurance in Chicago

Avg savings: $5,000/year

HSA Contribution Deduction in Chicago

Avg savings: $1,800/year

Long-Term Care Insurance in Chicago

Avg savings: $2,000/year

Medical Travel Expenses in Chicago

Avg savings: $800/year

Flexible Spending Account (FSA) in Chicago

Avg savings: $900/year