Illinois is known for its flat state income tax rate of 4.95%, which might sound straightforward and fair on paper.
However, for many residents, especially homeowners, this flat tax rate doesn’t tell the full story. The real tax challenge in Illinois comes from one of the highest property tax burdens in the country, combined with steep local levies that add to the financial pressure.
Why Property Taxes Hit Illinois Homeowners Hard
Illinois consistently ranks near the top nationally for property taxes as a percentage of home value. This high property tax burden is largely due to the state’s heavy reliance on local property taxes to fund public services such as schools, police, and infrastructure.
Unlike states that rely more on income or sales taxes, Illinois shifts much of the funding responsibility to homeowners.
The average property tax bill in Illinois exceeds $4,000 annually, with some counties and municipalities charging significantly more. For many residents, property taxes are the largest portion of their overall tax bills—far outweighing the impact of the flat income tax rate.
Local Levies Add to the Tax Weight
Adding to the complexity, Illinois is notorious for its steep local levies. These additional taxes, imposed by cities, school districts, and other local entities, drive up the total tax cost on homeowners and businesses alike.
Even with a flat state income tax, residents often face a patchwork of local taxes that vary widely depending on where they live.
This means two neighbors might pay very different tax amounts, depending on local government decisions and budgets.
The Impact on Illinois Residents and Businesses
For homeowners, the high property taxes and local levies translate into significant yearly expenses, which can affect affordability and influence decisions about where to live within the state.
For businesses, the combination of property taxes and local assessments can add to operational costs, making it harder to compete with companies in states that have lower overall tax burdens.
What’s Being Done?
Illinois lawmakers have been debating property tax relief for years, with proposals ranging from caps on annual increases to incentives for local governments to reduce reliance on property taxes.
However, finding a balanced solution is challenging—property taxes fund critical public services, and reducing them without cutting services requires new revenue sources or budget adjustments.
Illinois’ flat income tax rate is simple, but it doesn’t mask the significant property tax burden and steep local levies that residents face. For many homeowners and businesses, these costs are the defining feature of Illinois’ tax landscape.
If you live in Illinois—or plan to—understanding the full tax picture is essential to managing your finances effectively.
Carol McDaniel is a dedicated and results-driven professional with 5 years of experience and US News. Known for her strong problem-solving skills and collaborative mindset, Carol has built a reputation for delivering high-impact results across diverse teams and projects.
Throughout her career, she has demonstrated expertise in 2 core skills or areas, e.g., client relations and project coordination, and is passionate about continuous learning and meaningful contribution. Carol thrives in dynamic environments and consistently brings professionalism, adaptability, and a focus on growth to every role she takes on.