Illinois vs Texas: Taxes & Take-Home Pay 2026

Chicago to Dallas, Houston or Austin

Illinois to Texas is a common move, driven by jobs, housing costs and taxes. On the income side the difference is simple: Illinois taxes net income at a flat 4.95%, and Texas has no personal income tax. The Texas constitution requires voter approval before one could be created.

The catch is property tax. Texas raises much of its local revenue from property taxes, which are among the highest in the country, so a homeowner’s savings depend heavily on the house.

What Illinois actually charges

Illinois has no standard deduction. Each person on the return, including dependents, gets a $2,925 exemption in 2026, but it is unavailable once federal AGI passes $250,000 single or $500,000 joint. There is no local income tax anywhere in Illinois, including Chicago.

Examples from the engine: a single filer earning $75,000 owes about $3,568 in Illinois income tax. A married couple with two children earning $120,000 owes about $5,361, or $447 a month. In Texas both owe zero state income tax, and neither state withholds employee payroll contributions for disability or paid leave.

Property tax: the Texas trade-off

Texas school districts must exempt $140,000 of a residence homestead’s value, and homeowners aged 65 or older or disabled get an additional $60,000 school exemption. Cities, counties and other local taxing units may add an optional exemption of up to 20% of appraised value. Even so, total rates in fast-growing suburbs can make the annual bill on a newer home larger than the Illinois income tax the family stopped paying.

Illinois homeowners also face high property taxes, especially in Cook and the collar counties. Illinois offers an income tax credit for property tax paid on a principal residence, but not to filers with federal AGI above $250,000 (single) or $500,000 (joint). Before you move, compare a real tax bill for a home you would buy in Texas with your current Illinois bill plus your Illinois income tax.

Retirees get less from the move than workers

Illinois already lets residents subtract most retirement income, including pensions, Social Security, railroad retirement and governmental deferred compensation. A retiree living on those sources pays little or no Illinois income tax, so moving to Texas mainly saves tax on interest, dividends, capital gains and any wages. Workers, by contrast, save the full 4.95% on every dollar earned.

Sales tax and groceries

Both states charge 6.25% at the state level. Texas caps local additions at 2%, for a maximum combined rate of 8.25% and an average of 8.20%. Illinois has no such cap: the average combined rate is 8.98%, and Chicago’s general rate is 10.5%. Illinois eliminated its 1% state grocery tax on January 1, 2026, though many local governments adopted their own.

Mistakes to avoid when running the numbers

• Comparing income tax alone. For a homeowner, the Texas property tax bill on the new house is the number that decides whether the move saves money.
• Forgetting the Illinois exemption cliff. Above $250,000 of federal AGI (single) or $500,000 (joint), Illinois allows no personal exemption, so the full income is taxed at 4.95%.
• Assuming a Chicago city income tax. There is none, so a Chicago worker’s state tax is the same as anyone else’s in Illinois.
• Counting on the Texas homestead exemption for a second home or rental. It applies only to your residence homestead, and you have to apply for it.
• Overlooking pay earned in Illinois but paid later. A bonus for Illinois work that arrives after you move can still be taxed by Illinois.

The year you move

File Form IL-1040 with Schedule NR as a part-year resident, reporting income received while you lived in Illinois and any Illinois-source income afterwards. Texas has no return. Bonuses or deferred pay for work done in Illinois but paid after you leave can still be Illinois income.