Illinois

Illinois flat income tax rate is 4.95% on net income

“Except as provided in subsections (b)(2) and (b)(3) of this Section, beginning on January 1, 2015, a tax of 4.95% is imposed on the net income of every individual, trust, and estate for each taxable year ending after January 1, 2015.”

Note: Verbatim statutory text from 35 ILCS 5/201(b)(1) confirmed. URL resolves to the chapter-level ILGA index; §201(b)(1) is within this chapter. Illinois ILGA site serves the current statute. The 4.95% rate has applied since 2017 (the 2011 temporary increase expired and was replaced with the permanent 4.95%). Personal exemption $2,850/person; CLIFF to $0 at FAGI above $500,000 MFJ (immaterial at large-gain sizes).

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

IL taxes both in-state and out-of-state muni bond interest add-back of all federally-excluded interest

“An amount equal to all amounts paid or accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of adjusted gross income, except stock dividends of qualified public utilities described in Section 305(e) of the Internal Revenue Code;”

Note: 35 ILCS 5/203(a)(2)(A) adds back to base income all interest excluded from federal adjusted gross income, making both in-state and out-of-state municipal bond interest taxable in Illinois (only specific enumerated Illinois bonds escape). Quote verbatim from the live ILGA statute page.

IL taxes both in-state and out-of-state muni bond interest add-back of all federally-excluded interest

“An amount equal to all amounts paid or accrued to the taxpayer as interest or dividends during the taxable year to the extent excluded from gross income in the computation of adjusted gross income, except stock dividends of qualified public utilities described in Section 305(e) of the Internal Revenue Code;”

Note: 35 ILCS 5/203(a)(2)(A) adds back to base income all interest excluded from federal adjusted gross income, making both in-state and out-of-state municipal bond interest taxable in Illinois (only specific enumerated Illinois bonds escape). Quote verbatim from the live ILGA statute page.

Illinois conforms to IRC §1400Z-2 QOZ gain deferral and exclusion

“Gross income means all income derived from any source, except as otherwise provided in this Act, and includes compensation for personal services, including wages, commissions and similar items; gross receipts from trades or businesses; gains from dealings in property; interest; dividends; annuities; royalties; rents from real, personal or mixed property; and all other accretions to wealth, as defined by the Internal Revenue Code of 1986, as amended.”

Note: 35 ILCS 5/102 defines Illinois gross income by reference to the Internal Revenue Code as amended. Rolling IRC conformity incorporates IRC §1400Z-2 (QOZ gain deferral and 10-year exclusion) without modification.

Illinois conforms to IRC §1202 QSBS gain exclusion

“Gross income means all income derived from any source, except as otherwise provided in this Act, and includes compensation for personal services, including wages, commissions and similar items; gross receipts from trades or businesses; gains from dealings in property; interest; dividends; annuities; royalties; rents from real, personal or mixed property; and all other accretions to wealth, as defined by the Internal Revenue Code of 1986, as amended.”

Note: 35 ILCS 5/102 defines Illinois gross income by reference to the Internal Revenue Code as amended. Rolling IRC conformity incorporates IRC §1202 (QSBS gain exclusion) without modification; no state-level addback.

IL Publication 101 explicitly lists FNMA and FHLMC as not exempt from Illinois Income Tax

“The following types of income are not exempt from Illinois Income Tax: Income from debentures, notes, and bonds issued by the Federal National Mortgage Association (FNMA) including mortgage-backed bonds; Interest from Federal Home Loan Mortgage Corporation (FHLMC) securities.”

Note: Pub 101 pp. 3-4 list the exempt entities (FHLB, Farm Credit, FDIC, TVA, etc.; all with federal statutory preemption). p. 7 lists entities NOT exempt. GNMA, FNMA, and FHLMC all appear on the not-exempt list. The contrast is direct: same document, same table format, opposite columns.

Illinois flat income tax rate is 4.95% on net income

“Except as provided in subsections (b)(2) and (b)(3) of this Section, beginning on January 1, 2015, a tax of 4.95% is imposed on the net income of every individual, trust, and estate for each taxable year ending after January 1, 2015.”

Note: Verbatim statutory text from 35 ILCS 5/201(b)(1) confirmed. URL resolves to the chapter-level ILGA index; §201(b)(1) is within this chapter. Illinois ILGA site serves the current statute. The 4.95% rate has applied since 2017 (the 2011 temporary increase expired and was replaced with the permanent 4.95%). Personal exemption $2,850/person; CLIFF to $0 at FAGI above $500,000 MFJ (immaterial at large-gain sizes).

U.S. Treasury interest exempt from Illinois income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations

“Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax.”

Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption.

FHLB and FFCB bond interest exempt from Illinois income tax: federal enabling statutes mandate state tax exemption

“Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority.”

Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states.

Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation

“The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124).”

Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check.

IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback

“In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.”

Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged.

Illinois flat income tax rate is 4.95% on net income

“Except as provided in subsections (b)(2) and (b)(3) of this Section, beginning on January 1, 2015, a tax of 4.95% is imposed on the net income of every individual, trust, and estate for each taxable year ending after January 1, 2015.”

Note: Verbatim statutory text from 35 ILCS 5/201(b)(1) confirmed. URL resolves to the chapter-level ILGA index; §201(b)(1) is within this chapter. Illinois ILGA site serves the current statute. The 4.95% rate has applied since 2017 (the 2011 temporary increase expired and was replaced with the permanent 4.95%). Personal exemption $2,850/person; CLIFF to $0 at FAGI above $500,000 MFJ (immaterial at large-gain sizes).

Illinois estate tax graduated rate schedule: 0.8% to 16%

“Sec. 3. Illinois estate tax. (a) Imposition of Tax. An Illinois estate tax is imposed on every taxable transfer involving transferred property having a tax situs within the State of Illinois.”

Note: 35 ILCS 405/3 imposes the tax; the effective graduated rates (0.8% to 16%) derive from the pre-EGTRRA federal state death tax credit table that 35 ILCS 405/2 incorporates into the 'state tax credit' definition.

Illinois estate tax $4,000,000 deduction from Illinois taxable estate

“but recognizing the exclusion amount of only (i) $2,000,000 for persons dying prior to January 1, 2012, (ii) $3,500,000 for persons dying on or after January 1, 2012 and prior to January 1, 2013, and (iii) $4,000,000 for persons dying on or after January 1, 2013, and with reduction to the adjusted taxable estate for any qualified terminable interest property election as defined in subsection (b-1) of this Section.”

Note: 35 ILCS 405/2 ('state tax credit' definition): the $4,000,000 exclusion applies to persons dying on or after January 1, 2013 and is not inflation-adjusted.

Illinois flat income tax rate is 4.95% on net income

“Except as provided in subsections (b)(2) and (b)(3) of this Section, beginning on January 1, 2015, a tax of 4.95% is imposed on the net income of every individual, trust, and estate for each taxable year ending after January 1, 2015.”

Note: Verbatim statutory text from 35 ILCS 5/201(b)(1) confirmed. URL resolves to the chapter-level ILGA index; §201(b)(1) is within this chapter. Illinois ILGA site serves the current statute. The 4.95% rate has applied since 2017 (the 2011 temporary increase expired and was replaced with the permanent 4.95%). Personal exemption $2,850/person; CLIFF to $0 at FAGI above $500,000 MFJ (immaterial at large-gain sizes).

Illinois pass-through entity elective tax is 4.95%; owners receive a full credit

“The PTE tax rate is equal to 4.95 percent (.0495) of the taxpayer's net income for the taxable year.”

Note: SALT-cap workaround: a partnership or S corporation elects to pay 4.95% on its net income at the entity level, effective for tax years ending on or after December 31, 2021 (no statutory sunset). Each owner takes an Illinois credit equal to 4.95% times their distributive share, i.e. the full entity tax on that share (a 100% credit). Confidence medium: Illinois DOR guidance (tax.illinois.gov Q&A 689) quoting 35 ILCS 5/201(p).

Illinois pass-through entity elective tax is 4.95%; owners receive a full credit

“The PTE tax rate is equal to 4.95 percent (.0495) of the taxpayer's net income for the taxable year.”

Note: SALT-cap workaround: a partnership or S corporation elects to pay 4.95% on its net income at the entity level, effective for tax years ending on or after December 31, 2021 (no statutory sunset). Each owner takes an Illinois credit equal to 4.95% times their distributive share, i.e. the full entity tax on that share (a 100% credit). Confidence medium: Illinois DOR guidance (tax.illinois.gov Q&A 689) quoting 35 ILCS 5/201(p).

Illinois pass-through entity elective tax is 4.95%; owners receive a full credit

“The PTE tax rate is equal to 4.95 percent (.0495) of the taxpayer's net income for the taxable year.”

Note: SALT-cap workaround: a partnership or S corporation elects to pay 4.95% on its net income at the entity level, effective for tax years ending on or after December 31, 2021 (no statutory sunset). Each owner takes an Illinois credit equal to 4.95% times their distributive share, i.e. the full entity tax on that share (a 100% credit). Confidence medium: Illinois DOR guidance (tax.illinois.gov Q&A 689) quoting 35 ILCS 5/201(p).

Illinois conforms to the federal capital-loss base; treatment of an imported pre-residency section 1212 carryforward is a structural inference

“A tax measured by net income is hereby imposed on every individual, corporation, trust and estate for each taxable year ending after July 31, 1969 on the privilege of earning or receiving income in or as a resident of this State.”

Note: 35 ILCS 5/201(a) imposes the tax on net income; Illinois net income derives from base income, which is federal adjusted gross income as modified (35 ILCS 5/203(a)(1)), so the federal section 1212 capital-loss carryover flows through. Quote verbatim from the live ILGA statute page. No published guidance addresses the imported pre-residency carryforward, so that application remains a structural inference.