The history of the Illinois income tax rate starts at 2.5% in 1969 and runs to today’s 4.95% for individuals, with the corporate rate moving from 4.0% to 7.0% over the same period. The Illinois Constitution requires a single flat rate for all taxpayers, so every change in the state’s income tax has meant moving that one number up or down rather than adding brackets.
How the Individual Rate Has Moved Since 1969
Before 1969, Illinois had no broad-based income tax. Governor Richard Ogilvie signed the Illinois Income Tax Act that year, setting the individual rate at 2.5% and the corporate rate at 4.0%. The act is codified at 35 ILCS 5 and remains the governing law.
The 2.5% rate held for 14 years. In 1983, Governor Jim Thompson and the legislature passed a temporary surcharge that pushed the individual rate to 3.0% for a single year. It dropped to 2.75% in 1984 and returned to 2.5% in 1985, where it stayed through 1988.1Illinois Department of Revenue. Individual Income Tax Rates for Prior Years
The permanent move to 3.0% came in 1989. A separate legislative package raised the rate effective July 1, which produced a blended rate of 2.75% for tax year 1989. The full 3.0% applied starting in 1990, and it stayed there for two decades.2Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 5/201 – Tax Imposed
In the final hours of the 96th General Assembly on January 11, 2011, legislators raised the individual rate from 3.0% to 5.0%, retroactive to January 1. The increase was written with a sunset: the rate would fall to 3.75% on January 1, 2015, and later to 3.25%.2Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 5/201 – Tax Imposed
The first step of that sunset happened on schedule. The rate dropped to 3.75% on January 1, 2015, and Illinois operated there for about two and a half years. Then Public Act 100-0022 raised it to 4.95% effective July 1, 2017, with no sunset attached.3Illinois General Assembly. Public Act 100-0022 That is the rate individuals, trusts, and estates pay today.
The full individual rate history:
- 1969–1982: 2.5%
- 1983: 3.0% (temporary one-year surcharge)
- 1984: 2.75%
- 1985–1988: 2.5%
- 1989: 2.75% (blended; 3.0% took effect July 1)
- 1990–2010: 3.0%
- 2011–2014: 5.0%
- 2015–June 2017: 3.75%
- July 2017–present: 4.95%
How the Corporate Rate Tracked Along
Corporate rates in Illinois don’t move independently. Article IX, Section 3 of the Illinois Constitution caps the corporate income tax rate at no more than 8/5 (1.6 times) the individual rate.4Illinois General Assembly. Illinois Constitution – Article IX – Section: Limitations on Income Taxation Illinois has typically set the corporate rate at or near that ceiling, which is why the original 4.0% corporate rate matched 2.5% × 1.6 exactly.
When the individual rate rose to 3.0% in 1989, the corporate rate climbed to 4.8%. The 2011 individual hike to 5.0% pulled the corporate rate up to 7.0%. When the individual rate fell to 3.75% in 2015, the corporate rate dropped to 5.25%. And when Public Act 100-0022 set the individual rate at 4.95% in July 2017, the corporate rate returned to 7.0%, where it remains.3Illinois General Assembly. Public Act 100-0022
Corporations also pay a 2.5% Personal Property Replacement Tax on top of the base rate, bringing their combined state income tax to 9.5%. Partnerships, trusts, and S-corporations pay a 1.5% replacement tax.2Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 5/201 – Tax Imposed This replacement tax does not count against the 8/5 constitutional ratio because it operates under separate legal authority, replacing a former local property tax rather than functioning as a second income tax.
The 2020 Vote That Would Have Ended the Flat Rate
In November 2020, Illinois voters were asked to approve a constitutional amendment that would have allowed the legislature to impose graduated income tax rates, with higher earners paying a larger percentage. The amendment would have rewritten Article IX, Section 3, replacing the requirement for “a non-graduated rate” with language giving the General Assembly authority to set “the rate or rates” of income taxation.4Illinois General Assembly. Illinois Constitution – Article IX – Section: Limitations on Income Taxation
Roughly 53% of voters rejected it. The flat-rate requirement stays in the constitution, and any future attempt to adopt graduated rates would need to clear the same amendment process again.
Current Illinois Income Tax Rates
The rates established by Public Act 100-0022 remain in effect for tax year 2026:5Illinois Department of Revenue. Income Tax Rates
- Individuals, trusts, and estates: 4.95% of net income
- Corporations: 7.0% base rate plus 2.5% replacement tax, for a combined 9.5%
- Partnerships and S-corporations: 1.5% replacement tax