Ask Chicagoist: Two More Months Until Tax Day
By Rachelle Bowden in Miscellaneous on Feb 7, 2006 10:08PM
I am planning on moving to Chicago in the coming months. Do Chicago residents have to pay a local income tax based on the area you live? I pay 2.5% living downtown Cincinnati on top of state and federal taxes. I have searched everywhere and could find nothing other than state taxes. Thanks in advance, Dave
It's with an overwhelming feeling of disdain that Chicagoist has been watching the growing pile of W-2s, financial documents, and student loan interest forms that keep showing up in our mailbox. Luckily April is still two months away, so we'll just toss it all under the bed for now. We have plenty of time to sort it all out later, right?
Your search was right on the money -- Chicago does not have a local income tax. Rather, our income is taxed on the federal and state levels only. Illinois is a flat-rate income tax state (and has been since 1969 when the Illinois income tax law was first enacted), which means everyone pays the same 3% tax rate. Some people insist that makes Illinois a low-tax state, while others are more apt to point out the inequities in such a system. If you need more information on Illinois income taxes, the Illinois Department of Revenue has downloadable tax forms, information on deductions, and other riveting tax law information.
But don't think you're getting off easy -- income tax isn't the only type of tax you'll encounter living in Chicago, and many of the other taxes are location-dependent. After an increase last year, sales tax in Chicago now adds up to 9% -- a 6.25% state sales tax, 1.25% city, plus a variety of other local taxes. For groceries and medicine, the rate is 1%. Property taxes vary based on where you live in the city, creating a local tax of a sort, so if you plan on buying when you move here, that's something to keep in mind as well.
Uncertain about everything except death and taxes? Need some advice? Email ask(at)chicagoist(dot)com