How to Calculate Illinois Income Tax Liability

by Emily Weller

As of 2011, the income tax rate in the state of Illinois is a flat rate of 5 percent. Anyone who earns income in Illinois must pay 5 percent of net income as tax. The state allows taxpayers to take exemptions for themselves and any dependents they may have, which reduces the amount of the net income. Tax returns are due in Illinois on the same date that federal income tax returns are due.

1. Complete your federal income tax return if you have not done so already. Enter the amount of your adjusted gross income from form 1040, 1040A or 1040EZ on line 1 of Illinois form 1040.

2. Record any non-taxable interest or dividend income you earned on line 2 of Illinois form 1040. Although this income is exempt from federal tax, you still owe state tax on it.

3. Complete Schedule M if you have any other sources of income, such as tax-exempt interest for a child or earnings from a 529 plan. Write the total from Schedule M on line 3 of the Illinois 1040.

4. Add together the amounts on lines 1, 2 and 3 and record the total on line 4.

5. Determine the amount of income you can subtract from your total. If you received distributions from a tax-exempt retirement plan, such as a Roth IRA or Social Security, list the amount on line 5, but only if the amount is included in your total income. If you overpaid your Illinois income tax, write the amount on line 6. Record any additional subtractions, such as payments made to a 529 plan, on line 7. Total the amounts of lines 5, 6 and 7 and write on line 8.

6. Deduct the amount of line 8 from line 4 and record the amount on line 9. This is your base income for Illinois.

7. Write the number of exemptions you claimed on your federal tax return on line 10 of Illinois form 1040 and multiply the number by $2,000 as of 2011. For example, if you claimed an exemption for yourself, your spouse and your child, write 3 on line 10a, then write $6,000. If you are someone else's dependent and you earned more than $2,000, write 0 on line 10b. If you earned less than $2,000, write 1. If you are over age 65 or blind, you can add $1,000 to each exemption as of 2011.

8. Write the total amount of your exemptions on line 10, then subtract that amount from your base income. Write the amount on line 11. This is your net income.

9. Multiply the amount on line 11 by .05 to figure out the tax you owe.

Items you will need

  • Completed form 1040, 1040A or 1040EZ
  • IL Form 1040
  • Schedule M (optional)
  • Pen
  • Calculator

Photo Credits

  • Thinkstock/Comstock/Getty Images