For most households, a Missouri vs. Illinois taxes comparison lands in Missouri’s favor: lower income tax rates, a full capital gains exemption, dramatically lower property taxes, no estate tax, and cheaper corporate rates. Illinois wins in two specific places: it fully exempts retirement income, and it charges no annual tax on your vehicles. Whether the overall picture favors one state or the other depends heavily on whether you’re working, retired, or running a business.
Income Tax: Missouri’s Progressive Brackets vs. Illinois’s Flat Rate
Missouri’s top individual income tax rate for 2026 is 4.70%, reached on taxable income above $9,436. Income below that runs through progressive brackets starting at 0% on the first $1,348.1Missouri Department of Revenue. 2026 Missouri Withholding Tax Formula The top rate has been dropping through triggered reductions under Senate Bill 3 from 2022, and could fall as low as 4.5% if state revenue targets keep being met.
Illinois charges a flat 4.95% on every dollar of taxable income.2Illinois Department of Revenue. Income Tax Rates The Illinois Constitution requires a single rate, so the structure can’t shift to brackets without a constitutional amendment.
The flat rate hurts lower earners most. A single filer making $30,000 in Illinois pays 4.95% on essentially all of it. The same filer in Missouri pays an effective rate well below 4.70% because the first dollars fall into lower brackets.
Deductions Widen the Gap
Missouri’s 2026 standard deduction matches the federal one at $16,100 for single filers and $32,200 for joint filers.1Missouri Department of Revenue. 2026 Missouri Withholding Tax Formula Illinois has no standard deduction. Instead, each taxpayer and dependent gets a personal exemption of $2,925 for tax year 2026, with an extra $1,000 for filers 65 or older or legally blind.3Illinois Department of Revenue. Taxpayer Answer Center – Questions and Answers For most filers, Missouri’s system shields far more income before the rate is even applied.
Missouri also does something almost no other state does: it lets you deduct federal income taxes actually paid when calculating Missouri taxable income.4Missouri Department of Revenue. Federal Income Tax Deduction This benefits higher earners disproportionately, since they pay more federal tax and get a bigger subtraction. Illinois allows no such deduction.
Capital Gains: A Zero Rate in Missouri
Starting January 1, 2025, Missouri fully exempts individual capital gains from state income tax. Under House Bill 594, individuals deduct 100% of the capital gains reported on their federal return when calculating Missouri adjusted gross income.5Missouri Department of Revenue. Fully Exempt Capital Gains Tax Sell stock, real estate, or a business, and Missouri takes nothing.
Illinois taxes capital gains as ordinary income at the flat 4.95%. No preferential rate, no exemption. A $200,000 capital gain costs zero in Missouri and roughly $9,900 in Illinois. For anyone planning to sell a rental property, business, or large investment position, this alone can be the deciding factor.
The corporate side of the exemption is conditional: it activates only when Missouri’s top individual rate falls to 4.5% or below, which hasn’t happened yet.5Missouri Department of Revenue. Fully Exempt Capital Gains Tax For now, the full exemption applies only to individuals.
Property Taxes: The Biggest Swing
Property taxes drive most cross-border relocation decisions, and the structural difference is stark. Illinois assesses residential property at 33.33% of fair market value. Missouri assesses residential property at just 19%.6Missouri State Tax Commission. State Tax Commission Definitions
On a $300,000 home, Illinois calculates tax on $100,000 of assessed value. Missouri calculates tax on $57,000. Even at identical rates, the Illinois bill would be nearly double.
Rates aren’t identical, and they favor Missouri too. Effective property tax rates in the Chicago collar counties frequently run 2.5% to 3.5% of market value, driven by many overlapping taxing districts. Missouri’s effective rates typically run 0.8% to 1.5%.
Homeowner Relief
Illinois offers a General Homestead Exemption that reduces equalized assessed value by up to $10,000 in Cook County, $8,000 in counties bordering Cook, and $6,000 in other Illinois counties.7Illinois Department of Revenue. Property Tax – Exemption Information (PIO-74) A Senior Citizen Assessment Freeze locks in a base-year assessed value for qualifying homeowners.
Missouri’s main relief for homeowners is the Property Tax Credit, available to qualifying seniors and fully disabled individuals. It reimburses up to $1,100 of property taxes paid or $750 of rent equivalent, and it’s income-limited.8Missouri Department of Revenue. Property Tax Credit
Missouri’s Annual Vehicle Tax
Missouri levies personal property tax on vehicles, boats, and other tangible property every year. Vehicles are assessed at 33.33% of true market value, then local rates apply. On a $30,000 car, assessed value is roughly $10,000, and a typical annual bill lands in the $500 to $900 range.
Illinois has no annual personal property tax on vehicles. Owners pay a flat annual registration fee. Households with multiple vehicles in Missouri can easily see personal property tax bills exceeding $1,000 a year, and this is one of the few places where Missouri’s tax load meaningfully exceeds Illinois’s. People moving south across the border are often caught off guard because Illinois has no equivalent.
Sales Tax at the Register
Missouri’s state sales tax is 4.225%.9Missouri Department of Revenue. Sales/Use Tax Illinois’s base state rate is 6.25% on general merchandise.10Illinois Department of Revenue. What Are the Retailers Occupation and Use Tax Rates in Illinois Local add-ons matter in both states. Missouri’s combined average lands around 8.5%, with parts of the St. Louis area over 10%. Illinois averages above 8.8%, and Chicago’s combined rate reaches about 10.25%.
Illinois taxes groceries and prescription drugs at a reduced 1% state rate, provided the food isn’t prepared for immediate consumption; local sales taxes may still apply on top.11Legal Information Institute. Illinois Admin Code tit. 86, 140.126 – Taxation of Food, Drugs and Medical Appliances Missouri has moved to eliminate its state grocery tax, though local grocery taxes still hit the receipt in many jurisdictions.
Digital goods split the same direction. Illinois taxes streaming subscriptions, downloaded music, and e-books at the 6.25% state rate plus local. Missouri doesn’t tax digital goods at all.
Retirement Income: Illinois Wins Clearly
If you’re retired, the answer flips. Illinois fully exempts all distributions from qualified retirement plans, including Social Security, pensions, 401(k) withdrawals, and IRA distributions, from state income tax.12Illinois Department of Revenue. General Information A retiree living entirely on these sources owes Illinois nothing.
Missouri is generous but not blanket. Social Security is fully exempt for taxpayers below $100,000 federal AGI (married filing jointly) or $85,000 (single); above those thresholds, some benefits may become taxable. Missouri also allows a public pension subtraction of up to $49,824 in 2026, but that subtraction is reduced dollar-for-dollar by any Social Security subtraction already claimed. Private pensions historically got a smaller deduction, though recent legislation has been expanding it.
A retiree with $50,000 in private pension income and $25,000 in Social Security owes zero Illinois tax and would likely owe Missouri tax on a meaningful portion of the pension. The gap grows with retirement income size. For retirees on modest Social Security and public pensions, Missouri gets close to matching, but not quite there.
Estate and Transfer Taxes
Illinois imposes a state estate tax on estates above $4 million, with effective rates roughly 0.8% to 16% depending on estate size. Missouri has no state estate tax and no inheritance tax. Neither state taxes beneficiaries.
For a $6 million estate, a Missouri resident owes no state death tax. The same estate in Illinois owes tax on the amount above $4 million. The federal exemption ($13.61 million for 2024, adjusted for inflation) applies separately in both states, but Illinois’s lower threshold catches estates the federal tax wouldn’t.
Real estate transfer taxes also favor Missouri. Illinois charges $0.50 per $500 of sale price (0.1%) at the state level, with some municipalities adding their own. Missouri has no state real estate transfer tax.
Corporate and Business Taxes
Missouri’s corporate income tax is a flat 4%.13Missouri Department of Revenue. Corporation Income Tax Illinois charges 7% plus a 2.5% Personal Property Replacement Tax, for a combined effective corporate rate of 9.5%.2Illinois Department of Revenue. Income Tax Rates On $1 million of taxable corporate income, that’s $40,000 in Missouri versus $95,000 in Illinois.
Illinois also imposes a franchise tax on corporations based on paid-in capital, though it’s on the way out. For 2026, the first $10,000 in franchise tax liability is exempt, and the tax is scheduled to end January 1, 2028.14Illinois General Assembly. 805 ILCS 5/15.35 – Franchise Taxes Payable by Domestic Corporations Missouri has no franchise tax.
If You Cross the Border for Work
Missouri and Illinois have no income tax reciprocity agreement, which matters in the St. Louis metro area. If you live in one state and work in the other, you generally file two state returns: a nonresident return where you earn the income and a resident return in your home state.15Southern Illinois University Edwardsville. If I Live in Illinois and Work Full-Time in Missouri, Which State Tax Do I File My Annual Return With?
Your home state gives a credit for taxes paid to the other state, equal to the lesser of what you actually paid or what your home state would have charged. With Missouri’s top rate at 4.70% and Illinois at 4.95%, an Illinois resident working in Missouri pays 4.70% to Missouri and owes Illinois the remaining 0.25%. A Missouri resident working in Illinois pays 4.95% to Illinois and gets a full credit against Missouri, since the Illinois tax exceeds what Missouri would have charged.
Remote workers get taxed where they physically perform the work. Neither state applies a “convenience of the employer” rule. If you live in Missouri and work from home for an Illinois employer, the income is generally taxable only in Missouri.