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Retire in Illinois: 2026 Tax & Cost of Living Guide

Fully exempts all retirement income (SS, pensions, 401k/IRA). Offset by second-highest property taxes in the nation and a low-threshold estate tax ($4M).

State income tax

Flat 4.95%

Social Security

Not taxed

Estate tax

Yes

Property tax

2.08%

How Illinois Taxes Retirement Income

Social Security
Not taxed
Public pensions (state/federal)
Not taxed
Private pensions
Not taxed
401(k) / IRA withdrawals
Not taxed

Exemption / exclusion

All qualified retirement income (SS, pensions, 401k, IRA) is exempt — one of only three states to fully exempt 401(k)/IRA withdrawals

What Would You Pay in State Income Tax?

Rough estimates at the top marginal rate (actual effective rate will be lower for most retirees due to brackets, exemptions, and standard deduction):

Annual Retirement IncomeEstimated State TaxEffective Rate
$50,000$2,4755.0%
$100,000$4,9505.0%
$200,000$9,9005.0%

Estate & Inheritance Tax

State Estate Tax

Exemption: $4,000,000 · Top rate: 16%

Federal estate tax exemption is $13.61M (2024) — Illinois's lower threshold means more estates are subject to state tax than federal.

Top Cities for Retirees in Illinois

Chicago

$3,145/month estimated cost of living

States With No Income Tax

Alaska

Florida

Nevada

New Hampshire

South Dakota

Tennessee

Compare Against Other States

All 50 US States + DC

Ranked by tax-friendliness for retirees. Grouped by income-tax type.

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Retirement Methodology Calculators

How much do the big names actually say you need? See each guru's assumed return and withdrawal rate, side by side with academic defaults.

Dave Ramsey

12% / 8%

Bill Bengen

4% rule

Bogleheads

7% / 4%

FIRE Calculator

See how much you need to retire — in Illinois or anywhere else.

Safe Withdrawal Rate

Model your retirement paycheck with real historical data.

Tax rates and programs are subject to change. Data is current for 2024–2025. Always consult a qualified tax professional before making relocation decisions.