![]() From there, the rates increase to 4.95 percent for income between $100,000 and $250,000, 7.75 percent up to $500,000, and 7.85 percent up to $1 million. Governor Pritzker’s proposal would swap the flat tax for a graduated structure with six brackets, with rates starting at 4.75 percent on the first $10,000 of income and rising to 4.9 percent on income up to $100,000. That gives Illinois the third-highest effective rate on low-income families nationwide. As a result, middle- and low-income households must bear more of the cost of state services and pay a much higher share of their earnings in state and local taxes overall.Īs the chart shows, the bottom fifth of Illinois taxpayers, those making below $21,800, contribute 14.4 percent of their income in state and local taxes each year on average, compared to only 7.4 percent for the top 1 percent, or those with incomes above $537,400. Illinois, however, is one of eight states with a flat tax it taxes all income at 4.95 percent, regardless of income level. ![]() This helps balance the other major forms of state and local taxation - sales, property, and excise taxes - which, together, tend to fall hardest on those with the least income. Most states with a personal income tax maintain a progressive structure that taxes higher income at higher rates. ![]() ![]() Known as the “Fair Tax” plan, it’s a wise course correction to the current flat tax system, which falls harder on working people than the wealthy and doesn’t support the state’s financial needs. ![]() Pritzker proposes to replace the state’s regressive flat tax system with a graduated rate structure, which would require a voter-approved constitutional amendment in 2020. ![]()
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