Illinois’ flat income tax puts taxpayers exactly in middle, encourages wealthy to stay

A new report from the Tax Foundation shows the typical Illinois taxpayer will save big thanks to the constitutional protections of Illinois’ flat tax. Some state lawmakers want to take that protection away.

New research shows Illinois ranks 25th in the nation for its top state income tax rate in 2025, and thanks to the state’s flat income tax high-income earners have an incentive to stay.

But that could change if a Democrat-sponsored effort to kill the flat tax succeeds. State lawmakers cannot raise income taxes without angering everyone, but if they can eliminate the flat tax protection, they can divide income groups and raise taxes whenever their spending outstrips revenue.

The new report from the Tax Foundation shows the highest-earning Illinoisans will only pay 4.95% of their earnings toward state income taxes this year, the same as every other state resident.

Meanwhile, the top earners in California are predicted to pay the largest percentage of their salary toward state income taxes this year at 13.3%, thanks to the state’s progressive income tax.

The highest-earning Illinoisans will pay a lower income tax rate this year than the top earners in more than three-quarters of U.S. states that have a progressive income tax.

Illinois is one of only 15 states with a flat income tax, meaning all residents pay the same fixed percentage of their earnings toward state income taxes, regardless of their salary.

This single-rate structure benefits all Illinoisans by making it more difficult for lawmakers to raise taxes without facing accountability from voters collectively. Lawmakers faced angry constituents after the 3% state income tax rate was raised in 2011 and again in 2017, demonstrating the political cost of these statewide tax hikes.

Illinoisans have benefited from a single-rate income tax structure since the income tax protection was first placed in the state’s constitution in 1970. More states have joined the flat tax revolution in recent years.

Six other states have adopted a flat tax structure in the past four years to provide greater tax relief to their residents. Another eight U.S. states levied no income tax on residents as of January 2025.

The Tax Foundation also ranked other taxes in Illinois, including sales, property and business taxes, which landed it in the 37th-worst spot. The foundation noted the flat tax kept the ranking from sinking lower.

Despite Illinois voters rejecting Gov. J.B. Pritzker’s statewide progressive tax proposal in 2020 and several other states recently transitioning from a graduated income tax to a flat tax, lawmakers in Springfield continue to push for the power to tax residents at different rates.

State Sen. Robert Martwick, D-Chicago, on Feb. 5 introduced a bill to eliminate Illinois’ flat tax and allow a graduated, or progressive, income tax structure. The bill would put a question before voters statewide to amend the Illinois Constitution to eliminate the flat tax protection.

A similar constitutional amendment filed in the Illinois House by state Rep. Curtis Tarver, D-Chicago, would allow for an additional 3% income tax to be applied to individuals’ incomes in excess of $1 million. But once the protection is gone, state lawmakers are free to apply higher rates to more income groups without angering everyone at once.

That will likely include retirees, who don’t currently pay state income taxes. The state treasurer said that could happen. Plus every state that implements a progressive income tax also taxes retirement income.

Illinois is one of only four states in which the tax structure is protected in the state’s constitution. Illinois’ constitutional flat income tax requirement is a valuable protection for state taxpayers to ward off future tax hikes, which are a constant threat in a state where the governor’s newest budget proposal spends $16.7 billion more than before he took office.

Lawmakers should remember voters already rejected their effort to kill the flat tax. They should protect and promote the flat tax and lack of retirement tax as a benefit of living in Illinois.