Individual Income Tax

Statutory Reference

Definition

The Illinois Income Tax is imposed on every individual, corporation, trust, and estate earning or receiving income in Illinois. The tax is calculated by multiplying net income by a flat rate. The Illinois Income Tax is based, to a large extent, on the federal Internal Revenue Code (IRC).

Tax Rate

The rate is 3 percent of net income.

Tax Base

The federal adjusted gross income (AGI) is the starting point for the Illinois Individual Income Tax Return. You must add back certain income (e.g., federally tax-exempt interest income) and subtract other income (e.g., federally taxed retirement and Social Security income). The result is “base income.”

The base income earned in Illinois or while a resident of Illinois is then reduced by the number of federally claimed exemptions and any additional exemptions.

The amount of each federally claimed exemption is $2,000, and the additional exemptions are $1,000 each for any taxpayer or spouse who was either 65 years of age or older, legally blind, or both.

The total exemption amount is deducted from base income to arrive at “net income.” The tax rate is then applied against net income.

Form/Filing & Payment Requirements

The requirements are similar to federal income tax procedures, including withholding and payment of estimated tax. Illinois residents are given a credit for income taxes paid to other states.

Return — Form IL-1040, Illinois Income Tax Return, is due annually by the 15th day of the 4th month following the close of the taxable year. For most individuals, this is April 15th.

Estimated payments — Individuals are required to make estimated tax payments if they expect to owe more than $500 tax after subtracting Illinois Income Tax withheld, and the credits for Illinois Property Tax paid, Education Expense credit, Earned Income credit, credit for income tax paid to other states, and tax credits from Schedule 1299-C, Income Tax Subtraction and Credits (for individuals).

Farmers ( i.e., individuals who receive at least two-thirds of their total federal gross income from farming)and persons 65 years of age or older who were permanently living in a nursing home during the year are not required to make estimated payments.

For most individuals, estimated payments are due April 15th, June 15th, September 15th, and January 15th of the following year. For individuals using fiscal year reporting, payments are due on the 15th day of the fourth, sixth, and ninth months of the fiscal year, and of the first month after the end of the fiscal year. Individuals must complete Form IL-1040-ES, Estimated Income Tax Payments for Individuals, and mail it with their estimated tax payments.

Note: EFT participants and individuals paying by credit card do not complete or mail Form IL-1040-ES.

Automatic extension payment — Individuals who cannot file their annual returns by the due date are given an automatic extension of 6 months. This filing extension is not an extension of time to pay any tax owed. Payments and Form IL-505-I, Automatic Extension Payment for Individuals Filing Form IL-1040, must be sent by the annual return due date.

Note: EFT participants and individuals paying by credit card do not complete or mail Form IL-505-I.

Questions?

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