{"id":4679,"date":"2026-02-09T13:15:52","date_gmt":"2026-02-09T19:15:52","guid":{"rendered":"https:\/\/illinoistax.org\/?p=4679"},"modified":"2026-02-09T13:21:38","modified_gmt":"2026-02-09T19:21:38","slug":"the-annual-illinois-chartbook-how-do-taxes-in-illinois-compare-to-other-states","status":"publish","type":"post","link":"http:\/\/illinoistax.org\/?p=4679","title":{"rendered":"The Annual Illinois Chartbook: How Do Taxes in Illinois Compare to Other States?"},"content":{"rendered":"

The Annual Illinois Chartbook:<\/u><\/strong><\/h3>\n

How Do Taxes in Illinois Compare to Other States?<\/u><\/strong><\/h3>\n

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February 2026 (79.1)<\/strong><\/p>\n

Executive Summary
\n<\/strong>Illinois state and local tax collections remained higher than the national average in State Fiscal Year 2023, according to an annual analysis by the Taxpayers\u2019 Federation of Illinois (TFI). Illinois and its local governments continue to carry substantial debt, largely the result of decades-long underfunding of public pension systems that allowed governments to finance ongoing spending without commensurate increases in revenue.<\/p>\n

This annual analysis of state and local taxes is prepared for policymakers seeking an objective view of Illinois\u2019 tax landscape and how it compares with other states.<\/p>\n

About this Chartbook
\n<\/strong>States differ in how they finance public services, with some relying more heavily on state-level taxes, while others depend more on local taxes. For instance, when a consumer pays sales tax on a retail purchase, the actual government imposing or receiving the tax is typically of little consequence to the consumer. To\u00a0account for these state-by-state variations, this report relies on combined state and local tax data available through the U.S. Census Bureau, specifically, the Annual Survey of State and Local Finances<\/span><\/em><\/a>. While this\u00a0assures an accurate and comprehensive intergovernmental comparison, it also means the most recent data available is for the fiscal year that started July 1, 2022 and ended June 30, 2023 (Illinois State Fiscal Year 2023).<\/p>\n

Comparing taxes based solely on the dollar amount of taxes paid can be misleading. Higher tax collections or payments may simply reflect higher average incomes rather than a heavier effective tax burden. Focusing\u00a0only on dollar amounts therefore risks overstating relative tax burdens and obscuring how much of a state\u2019s economic activity is actually devoted to taxes. To account for these economic factors, TFI measures taxes as a percentage of Gross State Product (GSP) – the total value of goods and services produced within a state.\u00a0Expressing taxes relative to GSP provides a more clear view of how much economic activity is devoted to\u00a0taxation and avoids distortions caused by differences in population size or inflation.<\/p>\n

Census data has its limitations, but it is the most comprehensive data source available. Gross receipt taxes, such as Washington State\u2019s Business and Operations Tax or Texas\u2019 Margin Tax, are often a replacement for a corporate income tax. However, the U.S. Census includes gross receipt taxes with sales and excise taxes. There are other instances where the Census guidelines and classifications may not be intuitive, but for\u00a0simplicity and consistency, we follow the Census classifications.<\/p>\n

Past editions of this Chartbook separated individual and corporate income tax collections, but that approach is less meaningful as states adopt pass-through entity taxes (\u201cPTET\u201d). As the Tax Policy Center has noted, states differ in how they classify these revenues: some treat PTET payments as part of the individual income tax, others report them under the corporate income tax, and a few split them between the two. Because PTET can shift revenue across these categories even when the underlying economic activity is unchanged, TFI will now review individual and corporate income tax collections together to provide a clearer picture of total income-based tax receipts. This approach improves comparability, but it masks important differences in how taxes are distributed between business entities and individual taxpayers.<\/p>\n

ILLINOIS CONTINUES TO SEE HIGHER TAXES OVER HISTORICAL AVERAGES<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, TFI Calculations<\/i><\/p>\n

Illinois\u2019 tax collections have continued to increase in recent years. Before 2010, Illinois\u2019 total state and local tax collections as a percentage of GSP were slightly below the national average. However, Illinois started to be significantly higher than the national average due to the significant changes to incomes taxes in 2011, 2015, and 2017. The divergence seems to be increasing, possibly because a large number of states have been\u00a0reducing taxes while Illinois has not. Total state and local taxes in Illinois in SFY2023 increased by 0.8% in nominal dollars, but Illinois\u2019 GSP increased nominally by 7.5%. This combination resulted in the decline in state and local taxes as a percentage of GSP.<\/p>\n

In 1997, the U.S. Bureau of Economic Analysis changed how gross domestic product and GSP were calculated, resulting in slightly higher values. The U.S. Census Bureau did not perform the Annual Survey of State and Local Government Finances in 2001 and 2003, so data is unavailable for those years.<\/p>\n

ILLINOIS’ MAJOR TAXES ABOVE THE NATIONAL AVERAGES<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, TFI Calculations<\/i><\/p>\n

Illinois state and local tax collections exceed the national average in nearly every category defined by the U.S. Census Bureau except \u201cOther Taxes\u201d which includes severance taxes, estate taxes, transfer taxes, and other miscellaneous taxes. While Illinois\u2019 \u201cSales, Excise, and Gross Receipts Taxes\u201d are only slightly above the national average, the state\u2019s \u201cProperty Taxes\u201d are about 25% above the national\u00a0average, and \u201cIncome Taxes\u201d are roughly 36% higher.<\/p>\n

A significant reason for the large gap between the national average and Illinois on income taxes is the state\u2019s unusually heavy reliance on business income taxes. Corporations operating in Illinois pay the Corporate\u00a0Income Tax and all business types pay the Personal Property Replacement Income Tax.<\/p>\n

TAXES IN ILLINOIS ARE ABOVE THE NATIONAL AVERAGE<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, TFI Calculations<\/i><\/p>\n

In FY 2023, Illinois had the 8th highest total state and local tax collections when measured as a percentage of GSP, at 10.3%. This is 17% above the national average. Illinois\u00a0governments collected nearly $110 billion in taxes, or $16\u00a0billion more than what they would have collected if state and local tax structures were more in-line with the\u00a0national\u00a0average.<\/p>\n

PER CAPITA TAXES IN ILLINOIS ARE HIGH<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, TFI Calculations<\/i><\/p>\n

Although per capita measurements fail to consider the states\u2019 different economies, they still have a story to tell. When we say Illinois\u2019 state and local taxes are 10.3% of GSP, most people will gloss over the\u00a0figure as it\u2019s essentially a foreign language. Saying that Illinois\u2019 state and local tax\u00a0burden is $8,734 per person, on the other hand, it is easier to understand (even though few people would pay this\u00a0exact amount). The national average per capita state and local tax\u00a0collection is $7,053. The national average decreased<\/i> by $56 from the previous year, whereas Illinois saw an\u00a0increase of $95.<\/p>\n

ILLINOIS INCOME TAX COLLECTIONS ABOVE AVERAGE<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, TFI Calculations<\/i><\/p>\n

Measured as a share of GSP,\u00a0Illinois\u2019 combined individual and corporate income tax collections are at 3.4%, or 36% above the national average. This\u00a0underscores how Illinois leans more heavily on income-based taxes than most other states.<\/p>\n

ILLINOIS SALES, EXCISE, AND GROSS RECEIPTS TAXES NEAR NATIONAL AVERAGE<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, TFI Calculations<\/i><\/p>\n

Although Illinois has one of the higher combined state and local sales tax rates in the country, its overall collections from sales, excise, and gross receipts taxes amount to 3.2% of its GSP – roughly the national average. This reflects the structure of Illinois\u2019 sales tax base and highlights the importance of understanding Census classifications, which group traditional sales taxes together with gross receipts and excise taxes, inflating collections in states that rely heavily on gross receipts taxes.<\/p>\n

ILLINOIS PROPERTY TAXES HIGHER THAN AVERAGE<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, TFI Calculations<\/i><\/p>\n

Illinois is often cited as the state with the highest effective residential property tax rate, yet total state and local property tax collections equal 3.2% of its GSP. While this share is well above the national average, it does not place Illinois among the highest states overall. Several states with higher property tax collections as a share of\u00a0economic activity rely more heavily on\u00a0property taxes because they do not levy a general sales tax or a broad-based income tax. Most states also tax personal property, which Illinois does not. As a result, Illinois\u2019 aggregate property tax collections fall below the top tier even though many homeowners experience relatively high property tax\u00a0burdens.<\/p>\n

BELOW-AVERAGE RESIDENTIAL REAL PROPERTY VALUES INFLUENCE HIGHER PROPERTY TAX RATES\u00a0 IN ILLINOIS<\/b><\/p>\n

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Data Source: U.S. Census Bureau, 2024 American Community Survey<\/i><\/p>\n

Illinois is often cited as having the highest effective residential property tax rate in the country, but this chart reveals the two factors driving that ranking. On the vertical axis, Illinois ranks 6th highest\u00a0in median property tax bills. Conversely, on the horizontal axis, the state ranks 34th\u00a0in median home values. This combination of high tax bills applied to relatively affordable home values, mathematically results in the nation’s highest effective rate. The wide dispersion across the chart highlights how much states vary in their tax structures and their reliance on property taxes to fund local services. Ultimately, the data shows that while Illinois homes remain affordable, the tax burden on those homeowners is exceptionally high. Quadrants are defined using the national median residential home value and median property tax bill.<\/p>\n

ILLINOIS’ DEBT AND PENSION OBLIGATIONS STAND WELL ABOVE THE NATIONAL AVERAGE<\/b><\/p>\n

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Data Source: \u201cAnnual Survey of State and Local Government Finances,\u201d U.S. Census Bureau; U.S. Bureau of Economic Analysis, and Public Plans Database, Center for Retirement Research at Boston College, TFI Calculations<\/i><\/p>\n

State and local long-term debt and\u00a0unfunded pension liabilities represent claims on future economic output.\u00a0Measuring these obligations relative to state economic output provides context for their scale and sustainability. Illinois stands well above the national average, reflecting both historically high levels of\u00a0 borrowing and the cumulative effects of decades of pension underfunding to\u00a0support a mix of additional government services without raising taxes. Servicing these obligations in Illinois places ongoing pressure on state and local budgets,\u00a0requiring higher taxes, reduced flexibility in funding public services, or both.<\/p>\n

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The Annual Illinois Chartbook: How Do Taxes in Illinois Compare to Other States? fffffffff February 2026 (79.1) Executive Summary Illinois state and local tax collections remained higher than the national average in State Fiscal Year 2023, according to an annual analysis by the Taxpayers\u2019 Federation…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[16],"class_list":["post-4679","post","type-post","status-publish","format-standard","hentry","category-tax","tag-state-and-local-tax"],"_links":{"self":[{"href":"http:\/\/illinoistax.org\/index.php?rest_route=\/wp\/v2\/posts\/4679","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/illinoistax.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/illinoistax.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/illinoistax.org\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/illinoistax.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4679"}],"version-history":[{"count":2,"href":"http:\/\/illinoistax.org\/index.php?rest_route=\/wp\/v2\/posts\/4679\/revisions"}],"predecessor-version":[{"id":4693,"href":"http:\/\/illinoistax.org\/index.php?rest_route=\/wp\/v2\/posts\/4679\/revisions\/4693"}],"wp:attachment":[{"href":"http:\/\/illinoistax.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4679"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/illinoistax.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4679"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/illinoistax.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4679"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}