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Taxes

Personal Income Taxes

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

Advantages:

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

Illinois DCEO: https://www.illinois.gov/dceo/ExpandRelocate/Incentives/Pages/default.aspx

      

Corporate Income Taxes

For corporations (excluding S corporations), the Illinois Income Tax is 7%.   

Resources for your business can be found at https://www2.illinois.gov/business.

Illinois DCEO: https://www.illinois.gov/dceo/ExpandRelocate/Incentives/Pages/default.aspx

  

Sales Tax

Illinois has a number of exemptions, including:

  • 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 graphic arts production or 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
  • Fuel used for international flights
  • Certain second division motor vehicles and trailers if the Commercial Distribution Fee administered by the Secretary of State is paid

A manufacturer may earn a credit when purchasing exempt manufacturing machinery and equipment.  The credit is known as the Manufacturer's Purchase Credit (MPC).  The amount of the credit is limited to 50% of the 6.25% state tax that would have been incurred if the machinery had been taxable.  The credit may be used to satisfy Use Tax or Service Use Tax liability incurred on the purchase of qualifying production related tangible personal property.

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 are authorized to 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% and commercial and industrial property are assessed at 25%.  Tax rates average approximately 8.86% of actual value statewide.

 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.
  • Property tax Tax Increment Financing Zones (TIFs) are used in Illinois to promote development.
  • Cook County provides reduced assessment for new and expanded facilities.

Riverbend Community Property Tax Rates for 2016

 

Alton 9.4827
Bethalto 8.5288
East Alton 11.4536
Elsah 7.80297
Foster Township 8.0042
Godfrey 7.5215
Grafton 8.01281
Hartford 8.0902
Roxana 6.6631
South Roxana 8.2554
Wood River 8.9618
Wood River Twp. 6.7908

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

Unemployment Compensation Taxes

An unemployment compensation tax is applied to the first $9,800 in wages paid to each employee annually. A "new employer" rate applies for the first three years of operation; after 13 months experience in Illinois, an "experience-adjusted" rate is calculated. When an employer has been in business in Illinois at least 13 months, but less than 36 months, that employer pays the higher of the two rates; after 36 months, the employer pays its "experience adjusted" rate. The 2004 New Employer rate is 4.0 percent. Adjusted rates may vary from 0.9 percent to 8.6 percent.

Incentives:

  • The maximum rate for an employer with less than $50,000 in total wages in a given quarter is 5.4 percent.

Source: Illinois Dept. of Commerce & Economic Opportunity (DCEO) www.illinoisbiz.biz

Tax Burdens in the St. Louis Metropolitan Area: A Comparative Study

study link