Florida vs Illinois: Taxes & Take-Home Pay 2026

Who is making this move

Chicago-area families moving to Naples, Tampa or the Florida Panhandle tend to fall into two groups: high earners who can work remotely and retirees with investment income. The tax case is different for each, because Illinois already exempts most retirement income while taxing wages and investments at a flat 4.95%.

Florida vs Illinois at a glance

The table shows why the answer differs by household: the Illinois column only differs from Florida in the rows for wages and investment income.

Working households: a straight 4.95% saving

Florida has no personal income tax on wages, retirement income or investment income. Illinois taxes net income at 4.95% after a $2,925 exemption per person, and that exemption disappears once federal AGI exceeds $250,000 single or $500,000 joint.

A single remote worker earning $200,000 pays about $9,755 in Illinois income tax; in Florida, zero. Neither state withholds employee payroll contributions for disability or family leave, so the rest of the paycheck looks the same.

Retirees: investment income is the real difference

Illinois lets residents subtract pensions, Social Security, railroad retirement and governmental deferred compensation, and most IRA and 401(k) distributions also qualify. What Illinois does tax is interest, dividends and capital gains.

Worked example: a single 67-year-old Illinois resident with Social Security, a $40,000 IRA distribution and $20,000 of dividends. The Social Security and IRA money are subtracted. The dividends, less the $2,925 personal exemption and the extra $1,000 exemption for age 65+, are taxed at 4.95%: about $796 a year. In Florida it would be zero, so the saving is real but modest. A retiree planning to sell a business or a large stock position would see a much bigger difference.

Property tax and homestead rules

A Florida home you own and live in as your permanent residence can qualify for a homestead exemption of up to $50,000 off its taxable value, and that exemption brings the Save Our Homes cap on yearly assessment increases. You apply to the property appraiser in your new county. Florida also lets you port all or part of your accumulated Save Our Homes benefit to a new Florida homestead if you move again within the state.

Illinois homeowners can claim a state income tax credit for property tax on their main home, but not with federal AGI above $250,000 single or $500,000 joint. Property tax is set locally in both states, so for many homeowners the change in the property tax bill matters as much as the income tax change. Compare a current bill for your Illinois home with the estimated bill for the Florida home after the homestead exemption.

Sales tax

Florida charges 6% plus a county surtax averaging 0.98%, and the surtax applies only to the first $5,000 of a single taxable item. Illinois charges 6.25% plus local taxes averaging 2.73%; Chicago’s rate is 10.5%. On a $30,000 purchase taxed at general rates, the difference between 10.5% in Chicago and 6% plus surtax on $5,000 in Florida can easily top $1,250. (Vehicles have their own rules in both states, so check before buying.) Illinois removed its 1% state grocery tax in 2026, though many localities now levy one.

Leaving Illinois cleanly

• File Form IL-1040 with Schedule NR for the year you move, reporting income received while an Illinois resident plus Illinois-source income afterwards.
• Time big capital gains or Roth conversions for after your move date if you can; Illinois taxes them only while you are a resident.
• Apply for the Florida homestead exemption with your county property appraiser once the Florida home is your permanent residence.
• If you keep an Illinois home, keep records of where you spend your time.