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 Income | Estimated State Tax | Effective Rate |
|---|---|---|
| $50,000 | $2,475 | 5.0% |
| $100,000 | $4,950 | 5.0% |
| $200,000 | $9,900 | 5.0% |
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
States With No Income Tax
Compare Against Other States
All 50 US States + DC
Ranked by tax-friendliness for retirees. Grouped by income-tax type.
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.
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.