Illinois taxpayers paid a higher percentage of their income in taxes than residents of all but eight other states, and that was before the most recent income tax hike, according to a new analysis of state taxes.
Using 2017 income tax data and the latest property, sales and excise taxes, financial data firm WalletHub found that Illinoisans pay 9.67 percent of their annual income in local and state taxes. This also considers that Illinois residents earn a median income that’s $2,600 higher than the average American. WalletHub analyst Jill Gonzalez said Illinois’ property taxes are the main driver.
“The bulk of that does come down to property taxes,” she said. “That’s where a lot of government services get funding from within the state.”
For example, most of the state’s more than 800 local school districts get the majority of their funding from property taxes.
Illinois has more than 1,200 different sales and excise tax jurisdictions. Gonzalez said residents moving to higher-tax areas generally take that into account.
“People who think “if I’m moving into the city then that’s something I signed up for,’” she said.
Illinois lawmakers raised the state’s income tax rate by 40 percent in July 2017 and they’re considering changing the state’s constitution to allow for a progressive income tax where higher wage earners pay higher rates. Gonzalez said the data used for the rankings used 2017 income tax rates, to which Illinois was still listed at 3.8 percent.
Minnesotans paid a higher tax rate than Illinois residents do, largely because of that state’s progressive income tax rates.
The report found the state’s with the highest total tax burden were New York (12.97%), Hawaii (11.71%), Maine (10.84%), Vermont (10.77%), Minnesota (10.25%), Rhode Island (10.20%), New Jersey (9.86%), Connecticut (9.70%), Illinois (9.67%) and Iowa (9.49%), according to the WalletHub report.
The state’s with the lowest total tax burden were New Hampshire (6.86%), Florida (6.56%), Tennessee (6.28%), Delaware (5.55%) and Alaska (5.10%).