No, Illinois does not have a graduated income tax. Every resident pays the same flat rate of 4.95% on net income, and that structure is written into the state constitution.1Illinois Department of Revenue. Income Tax Rates Voters rejected a proposed amendment in November 2020 that would have allowed the legislature to set different rates for different income levels, so the flat tax remains in place for 2026 with no imminent change on the horizon.
Why the Flat Rate Is Locked In
Illinois is one of a small group of states where the flat tax is a constitutional requirement rather than a legislative choice. Article IX, Section 3 of the 1970 Illinois Constitution states that any tax measured by income must be imposed “at a non-graduated rate.”2Illinois General Assembly. Illinois Constitution – Article IX Revenue That single phrase is why the General Assembly cannot simply pass a bill creating tax brackets. Changing to a graduated system requires amending the constitution, which takes a three-fifths vote in both legislative chambers followed by voter approval at a general election.3Illinois General Assembly. Illinois Constitution Article XIV – Constitutional Revision
The provision came out of the 1970 Constitutional Convention, where delegates settled a long-running fight between business groups pushing for a flat structure and labor and education advocates who wanted progressive brackets. The compromise preserved the income tax that had been enacted a year earlier while blocking future legislatures from switching to graduated rates without going back to the voters. It was not the first time Illinois had taken up the question. Voters rejected an income tax amendment in 1966, and the Illinois Supreme Court struck down a graduated income tax law in 1932 as unconstitutional under the prior 1870 constitution.
How the Flat Tax Works Now
The 4.95% rate applies uniformly to every dollar of net income after Illinois-specific adjustments and exemptions are subtracted from federal adjusted gross income. It has been in effect since July 2017.1Illinois Department of Revenue. Income Tax Rates
For 2026, the personal exemption is $2,925 per person, with an additional $1,000 for filers who are 65 or older or legally blind. The exemption phases out completely for taxpayers with adjusted gross income above $250,000, or $500,000 for joint filers.4Illinois Department of Revenue. What Is the Illinois Personal Exemption Allowance
Corporations pay 7% in income tax plus a 2.5% Personal Property Replacement Tax, for a combined 9.5%. S corporations, partnerships, and trusts pay the replacement tax at 1.5%.5Illinois Department of Revenue. What Is the Tax Rate for Businesses, Trusts, and Estates The constitution caps the corporate rate at no more than eight-fifths of the individual rate, which currently works out to a ceiling of 7.92%.2Illinois General Assembly. Illinois Constitution – Article IX Revenue
One important carve-out softens the flat rate for retirees. Social Security benefits, pension income, 401(k) and IRA distributions, and most other retirement payments are fully exempt from Illinois income tax, regardless of the recipient’s income level.6Illinois Department of Revenue. Does Illinois Tax My Pension, Social Security, or Retirement Income That exemption is unusually broad compared with most states that tax income.
The 2020 Vote on Graduated Rates
Governor J.B. Pritzker made a graduated income tax a signature policy goal. In May 2019 the legislature passed Senate Joint Resolution Constitutional Amendment No. 1, sending the question to voters.7LegiScan. Illinois Senate Joint Resolution Constitutional Amendment 1 Alongside it, Pritzker signed Senate Bill 687, which laid out the six-bracket rate schedule that would have taken effect if the amendment passed. Rates ran from 4.75% on the first $10,000 of income up to 7.99% on income above $750,000 for single filers or $1 million for joint filers.8Ballotpedia. Illinois Allow for Graduated Income Tax Amendment 2020
The amendment failed. Final results showed 46.73% voting yes and 53.27% voting no, roughly 2.68 million votes in favor against 3.06 million opposed.8Ballotpedia. Illinois Allow for Graduated Income Tax Amendment 2020 Constitutional amendments in Illinois need either three-fifths of the votes cast on the question or a simple majority of everyone who voted in the election.3Illinois General Assembly. Illinois Constitution Article XIV – Constitutional Revision The measure cleared neither bar.
The campaign was one of the most expensive ballot fights in American history. Supporters spent about $62 million, much of it from Pritzker personally. Opponents, heavily funded by hedge fund executive Ken Griffin, spent roughly $61 million.8Ballotpedia. Illinois Allow for Graduated Income Tax Amendment 2020 Opponents framed the amendment as a “blank check” that would let lawmakers raise rates on anyone once the flat protection was gone, a message that landed with voters who had seen two prior income tax hikes in the previous decade. The COVID-19 pandemic added to the reluctance to overhaul the tax code in the middle of economic upheaval.
Is Illinois Likely to Get a Graduated Tax Soon?
The short answer is no. State Senator Rob Martwick introduced new graduated tax resolutions in both 2023 and 2025, and Representative Abdelnasser Rashid filed a companion measure in the House that picked up more than two dozen co-sponsors. Neither advanced to a floor vote by the May 2025 deadline required to put an amendment on the 2026 ballot.
A separate approach has drawn some attention: a “millionaire’s tax” surcharge. Former Governor Pat Quinn floated a 3% surcharge on income above $1 million, with revenue directed to property tax relief. A House version would split proceeds between property tax relief and education funding. Any such surcharge would still require a constitutional amendment, because it would introduce a different rate for a specific income range.
The political math remains hard. A three-fifths vote in both chambers is a steep hurdle, and public opinion has not shifted dramatically since 2020. Barring a significant change in fiscal conditions or voter sentiment, Illinois’s flat 4.95% rate is likely to stay on the books.
How Illinois Fits Among Other States
As of 2026, 15 states impose a flat individual income tax, eight states have no income tax, and the rest use graduated brackets. What sets Illinois apart is not the flat rate itself but the constitutional lock behind it. Most flat-tax states adopted their structure by statute and could shift to brackets through ordinary legislation. In Illinois, changing the rate structure requires a supermajority in Springfield and a statewide vote, making the flat tax among the most difficult in the country to change.
The full exemption for retirement income adds another layer of variation. Two Illinois residents with the same total income can face very different state tax bills depending on whether that income comes from wages or from pensions and retirement accounts. That is a feature of the current flat system, and it would have carried over under the 2020 proposal as well.