Filing Illinois State Taxes

In the state of Illinois, income tax is imposed on every person, firm, trust and estate earning. A 3% flat tax rate is applicable on a taxpayer's federal adjusted gross income.

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Personal Income Tax

Taxpayers in Illinois calculate their state liability by multiplying their income by a flat rate, which in 2008 is 3%. With the help of the government website, IL-1040 Web File, most eligible taxpayers in Illinois can electronically file their state returns.

Sales Tax

For general merchandise, Illinois sales tax rate is 6.25%. On the other hand, for qualifying medical appliances, drugs and food, a lower rate of 1% is applicable. The state of Illinois allows a number of exemptions from tax. They are included in Common Sales Tax Exemptions and Publication 104. If you want to take a look at the whole list of exempt transactions, you must review Illinois Administrative Code Section 130.120. Local government sales tax rates are normally modified every January and July.

Personal and Real Estate Property Tax

In the state of Illinois, only real estate property is taxed. The revenue that comes from real estate property tax forms a major segment of income for the more than 6,000 taxing districts. Property tax is not assessed at state level, but local level. Property tax in Illinois is generally implemented by local government which consists of townships, counties, special taxing districts and municipalities.

The whole property tax cycle in Illinois is for a period of two years. During the initial year, the property is evaluated taking into account the value of the property. In the second year, the tax bills are calculated and payments are collected from the taxpayers. The majority of properties in the state of Illinois are evaluated at 33.33% of market value. This is not the case with farm land which is evaluated on the basis of its ability to generate income. For tax rates and exemptions, contact the tax assessor's office.

There are plenty of exemptions available for homeowners of Illinois. They include :

• Disabled Veterans Exemption.
• General Homestead Exemption.
• Senior Citizens Assessment Freeze Homestead Exemption.
• Homestead Improvement Exemption.

Inheritance and Estate Tax

• You do not need to pay any inheritance tax in Illinois.
• Estate tax, with regard to federal estate tax collection, is also quite limited in Illinois.