Illinois vs Indiana: Taxes & Take-Home Pay 2026
On a $100,000 salary you keep $74,375 in Illinois and $74,330 in Indiana — $45 more per year in Illinois ($4 a month). Single filer, standard deductions.
Updated 2026-10-03
Take-home pay at every salary
| Gross salary | Illinois | Indiana | Difference |
|---|---|---|---|
| $40,000 | $32,485 (18.8% tax) | $32,398 (19.0% tax) | $87 |
| $60,000 | $47,565 (20.7% tax) | $47,492 (20.8% tax) | $73 |
| $75,000 | $58,025 (22.6% tax) | $57,962 (22.7% tax) | $63 |
| $100,000 | $74,375 (25.6% tax) | $74,330 (25.7% tax) | $45 |
| $150,000 | $106,511 (29.0% tax) | $106,501 (29.0% tax) | $10 |
| $250,000 | $170,952 (31.6% tax) | $171,012 (31.6% tax) | -$60 |
- Illinois total tax rate
- Indiana total tax rate
Where the money goes at $100,000
- Illinois
- Indiana
Sales tax: 8.98% in Illinois vs 7.00% in Indiana (average combined rate).
About taxes in Illinois
- Illinois taxes all net income at a flat 4.95% rate in 2026, the same rate used for payroll withholding (Form IL-700-T).
- The Illinois personal exemption rises to $2,925 per person for tax year 2026, up from $2,850 in 2025.
- Illinois has no standard deduction; the per-person exemption ($2,925 each for you, your spouse and each dependent) is the main allowance.
- The exemption is not available if your federal AGI exceeds $250,000 (single) or $500,000 (married filing jointly).
- Illinois eliminated its 1% state sales tax on groceries effective January 1, 2026, though many local governments adopted their own grocery taxes.
About taxes in Indiana
- Indiana’s flat state income tax rate is 2.95% for 2026 and is scheduled to fall to 2.90% in 2027.
- Every Indiana county also levies its own income tax, from 0.5% in Porter County to 3.0% in Randolph County; Marion County (Indianapolis) charges 2.02%.
- Indiana has no standard deduction; instead each taxpayer gets a $1,000 personal exemption, and most dependent children add a further $1,500.
- Adopted children qualify for a $3,000 exemption for withholding purposes.
- Indiana’s 7% state sales tax is tied for the second-highest state rate in the US, and there are no local sales taxes.
The Chicago–Northwest Indiana question
Thousands of people live in Lake or Porter County, Indiana and work in Chicago, or the reverse. Indiana’s state rate is 2.95% in 2026, falling to 2.90% in 2027, versus Illinois’s 4.95%. But Indiana adds a county income tax, and the two states have no reciprocal agreement.
The key takeaway: living in Indiana does not lower your state tax rate on wages earned in Illinois. Illinois taxes those wages first at 4.95%, Indiana credits that tax against its own state tax, and you still owe your Indiana county tax.
Side by side
| Illinois | Indiana | |
|---|---|---|
| State income tax | 4.95% flat | 2.95% flat |
| Personal exemption | $2,925 per person | $1,000 per person, +$1,500 for most dependent children |
| Local income tax | None | County tax, 0.5% (Porter) to 3.0% (Randolph) |
| Sales tax | 6.25% + local (avg 8.98%) | 7% flat, no local |
| Renter’s deduction | No | Up to $3,000 |
Worked example: Porter County resident working in Chicago, $70,000
The savings from living in Indiana come from housing, property tax and sales tax, not income tax. Because Indiana’s county tax is set by the county you live in on January 1, a commuter in a higher-rate county pays more.
- Illinois taxes the Chicago wages: about $3,320 (4.95% after the $2,925 exemption).
- Indiana state tax would be about $2,036, but Indiana’s credit for tax paid to another state is the least of the tax actually paid, Indiana’s rate times the income taxed by both, or the Indiana tax due. Since Illinois’s tax is higher, the Indiana state tax drops to zero.
- Porter County tax still applies at 0.5%: about $345. Total: about $3,665, slightly more than the $3,320 a Chicago resident would pay.
Illinois residents working in Indiana
The reverse case works differently. An Illinois resident who works in Indiana pays Indiana state tax as a nonresident and also owes county tax for the Indiana county where their principal place of work was on January 1. Illinois then gives a credit on Schedule CR for tax paid to other states, but because Illinois’s rate is higher, Illinois tax usually remains. Illinois’s own guidance notes that employers may voluntarily withhold Illinois tax from such workers because the credit will not cover the full Illinois liability.
Retirement income and property tax
Retirees are the group most likely to be surprised. Illinois lets residents subtract Social Security and income from qualified employee benefit plans, IRAs and government pensions, so many Illinois retirees owe little state tax. Indiana offers extra exemptions for filers aged 65 or older, but a retiree with a large private pension or IRA should check Indiana’s rules before assuming its lower rate means a lower bill.
Property tax bills vary by county on both sides of the line, so compare actual bills. Illinois offers an income tax credit for property tax on a principal residence for filers with federal AGI up to $250,000 single or $500,000 joint. Indiana renters can deduct rent paid on their home up to $3,000 per return.
Moving between the two
Part-year Indiana residents file Form IT-40PNR; Illinois part-year residents file Form IL-1040 with Schedule NR. Your Indiana county tax for the whole year follows where you lived on January 1, so someone who moves to Indiana in February does not pay Indiana county tax as a resident until the following year (though their work county can apply).
Frequently asked questions
Is Illinois or Indiana better for taxes?
At $100,000, Illinois leaves you $45 more per year after income and payroll taxes. The gap widens at higher incomes ($60 at $250,000).
How much is $60,000 after tax in Illinois and Indiana?
$47,565 in Illinois and $47,492 in Indiana.
Do Illinois and Indiana have a reciprocal tax agreement?
No. Indiana’s reciprocal states are Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin. Illinois’s are Iowa, Kentucky, Michigan and Wisconsin. Workers crossing the Illinois–Indiana line pay the work state and claim a credit at home.
If I live in Indiana and work in Chicago, which state do I pay?
Illinois taxes your wages at 4.95%. Indiana credits that against your Indiana state tax, usually eliminating it, but you still owe your Indiana county income tax.
How is Indiana county tax determined?
By the county where you lived on January 1. If you lived outside Indiana on January 1 but your principal place of work was in an Indiana county, that county’s rate applies.
Can Indiana renters deduct rent?
Yes. Indiana residents can deduct rent paid on their principal residence, up to $3,000 per return ($1,500 if married filing separately), when the home is subject to Indiana property tax. Illinois has no equivalent deduction.
Is Indiana sales tax lower than Illinois?
Indiana charges a flat 7% with no local sales taxes. Illinois’s average combined rate is 8.98%, and 10.5% in Chicago.
Sources
Figures are taken from official government publications and were last reviewed on 2026-10-03.
- Illinois DOR — Bulletin FY 2026-15, What’s New for Illinois Income Taxes
- Illinois DOR — 2026 IL-700-T Withholding Tax Tables
- Tax Foundation — 2026 State Income Tax Rates and Brackets (cross-check)
- Tax Foundation — State and Local Sales Tax Rates, Midyear 2026
- Indiana DOR – Departmental Notice #1 (county income tax rates and residence date)
- Indiana DOR — Rates, Fees & Penalties
- Rev. Proc. 2025-32 (2026 inflation adjustments incl. OBBBA)
- IRS: Tax inflation adjustments for tax year 2026, including OBBBA amendments
- IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
- Indiana DOR – Information Bulletin #28, residents with out-of-state income and nonresidents
- Indiana DOR – Information Bulletin #38, Renter’s Deduction
- Illinois DOR – 2025 Form IL-1040 instructions (Schedule NR, Schedule CR, retirement income, property tax credit)
- Illinois DOR – Publication 130, Who is Required to Withhold Illinois Income Tax (reciprocal states)