Comparison of Illinois Individual Income Tax Amounts With Surrounding States--Who Wins, Who Loses?

In July 2017 the Illinois General Assembly essentially made permanent the 66 2/3% tax rate increase which was originally enacted in January 2011 but which had sunset after 2014. Since Illinois is a flat tax state, there were some who argued that the Illinois tax rate, even after the increase in 2011 and again in 2017, was lower than surrounding states implying that Illinois taxpayers were still relatively better off than residents of surrounding states. This study provides a brief history of the Illinois individual income tax. This study also compares the individual income tax amounts for Illinois and six surrounding states for the years 2010-2016 for ten representative tax scenarios to see which states have the highest and lowest individual income tax amounts during this period and how the amounts have changed over the time period included in the study. The implications of this study include thinking about how a flat tax structure compares with a progressive tax structure for various tax scenarios. Additionally, the study provides information as to which of the states included in the study are the most “tax-friendly” for representative tax scenarios