The amount of state and local taxes paid here also is near the nation’s highest.
Illinoisans continue to pay the highest combined state and local tax rate in the country, according to WalletHub.
Effective state and local tax rates totaled almost 17% for a median Illinois household last year, compared with the national average of just over 11.02% and higher than No. 2 New York, at 14.95%.
The median amount of state and local taxes for an Illinois household was $12,538 last year, fourth-highest in the country. The national median was around $8,949. (These amounts use a different household measurement.)
Illinois’ burden is driven by property, sales and excise taxes that exceed national averages and those in neighboring states.
Property taxes are especially high, with an effective rate of 1.92% of the value of a typical home, more than double the national median of 0.89%.
Sales taxes are also elevated in Illinois, with a 6.25% state rate and a nearly 9% combined state and local rate on average.
High taxes were a top-two issue for 58.1% of likely Illinois voters in a recent poll. State residents aren’t waiting for lawmakers to hear their concerns — almost all of the nearly 83,000 who left Illinois in 2024 went to states with lower taxes.
In Iowa, the neighboring state with the next-highest combined state and local tax rate, the annual tax total for median household is over $3,841 less than in Illinois. Indiana and Wisconsin also impose significantly lower combined burdens.
Illinois needs to reduce its tax burden to encourage more people and businesses to stay or move here. That cannot happen without improving fiscal responsibility. Lawmakers should consider reforms such as:
- Enacting a spending cap to ensure the state’s budget grows responsibly.
- Rightsizing agency spending by eliminating waste and returning costs to sustainable levels.
- Reforming pensions to prevent retirement obligations from crowding out necessary services and driving up taxes.
