Income Taxes

Personal income earned in Illinois or received by Illinois residents is taxed at 4.95% (effective July 1, 2017.)

• There are no local personal income taxes in Illinois.
• Retirement income is not taxed in Illinois.

Business Income

For corporations (excluding S corporations), the Illinois Income Tax is 7% (effective July 1, 2017.)

Illinois DCEO Tax Structure: Tax Structure – Tax Assistance (illinois.gov)

Sales Tax

Illinois has a number of exemptions, including these items exempt from the state tax:

• Sales of tangible personal property to interstate carriers for hire used as rolling stock (e.g., semi-tractor trailers, railroad cars)
• Sales of machinery and equipment that will be used primarily in manufacturing/assembling of tangible personal property for wholesale or retail sale or lease and production agriculture
• Qualified sales of building materials that will be incorporated into real estate as part of a project for which a Certificate of Eligibility for Sales Tax Exemption has been issued by the enterprise zone administrator
• Qualifying purchases of tangible personal property used in a manufacturing or assembling process by businesses located in an enterprise zone and certified by the DCEO as qualifying to make these purchases because jobs will be created or retained

Utility Taxes

Illinois imposes a tax on those in the business of selling, distributing, supplying, or furnishing electricity or natural gas for use or consumption. The state’s telecommunications tax is 7% with local taxes adding on additional 1% to 5%. The electricity tax is 5%, 0.32 cents per kilowatt-hour, or taxed at a declining graduated rate based on usage, whichever is lower. Some local governments also collect utility taxes.

Incentives:

• Illinois does not tax water and sewer utilities.
• Electricity and natural gas tax exemptions are available in Illinois Enterprise Zones (certain job creation criteria apply).
• Natural gas bought from producers outside the state is not subject to the natural gas tax.

Property Tax

Local governments in Illinois collect property taxes in real property (land and buildings).  Real property is assessed at 33.4% of market value, except in Cook County, where residential is assessed at 10%.

Incentives:

• Illinois does not collect a state tax on personal property.  All property other than real estate is exempt from the property tax in Illinois.  Thus, all classes of personal property, including machinery, equipment, inventories and intangibles, are exempt.
• Local taxing bodies may abate the property taxes of a new or expanded industrial or commercial facility (up to $3 million spread over as many as 10 years).
• Taxing bodies within Illinois Enterprise Zones may abate property taxes without a dollar limit for the life of the zone (up to 30 years from the time of the zone’s creation) for any project in the zone.
• Pollution controls are assessed at salvage value (lacking any economic productivity) rendering them essentially exempt from the property tax.
• Property tax caps are in effect in many Illinois counties, limiting increases in property tax rates to the rate of inflation or 5%, whichever is lower.
• Tax Increment Financing Zones (TIFs) are used in Illinois to promote development.

Riverbend Community Property Tax Rates for 2021

For a list of historical tax rates by city, click here.