Illinois state, local sales taxes rank 7th in U.S.
Illinoisans pay one of the highest sales tax rates in the nation when local and state sales taxes are averaged. The average rate of 8.83% was up slightly from a year earlier.
If you buy something in Illinois, combined state and local sales taxes increase the sticker price by an average of 8.83%.
That rate from July 1 is up slightly from the rate a year earlier when the Tax Foundation did its mid-year sales tax survey. The average was up 3 cents on a $10 purchase from a year earlier in Illinois.
Illinoisans all pay 6.25% in state sales taxes. They pay an additional 2.58% on average in local sales taxes to reach the 8.83% rate, which places Illinois 7th highest in the nation. Louisiana took the No. 1 spot with a 9.55% average.
The local tax rate average was calculated by weighting rates by population. The Tax Foundation found the maximum local tax rate in Illinois to be 9.75%, which was the highest in the U.S.
Residents of Chicago pay a total rate of 10.25%. It’s the highest combined sales tax of any U.S. city with at least 200,000 residents, a title Chicago has held since the Cook County Board passed a sales tax hike in 2016.
Illinois sales tax averages have crept up to 8.83% from 8.22% between 2021 and 2015, according to the Tax Foundation. Illinois was 10th in the nation for sales taxes in 2015 but is now No. 7.
Sales taxes, income taxes, property taxes gasoline taxes and cell phone taxes are all among the nation’s highest in Illinois. An Illinoisan over a lifetime will pay $693,792 in taxes, which is 43% of everything that person will earn and is one-third more than the U.S. average.
State leaders have yet to admit nickel-and-diming residents is hurting the state, but the 2020 U.S. Census found Illinois lost population for the first time in 200 years.
A huge culprit in the exodus is Illinois’ second-highest in the nation property taxes. Illinois’ residential property taxes have grown 3.3 times faster than median household incomes since 1990. Total state property taxes outpaced population growth 14 times over since 1963.
This rapid growth in property taxes has been driven by state lawmakers’ need to meet exponentially increasing shortfalls in Illinois’ worst-in-the-nation pension crisis. State spending on pensions has mushroomed over 533% since 2000 while state spending on social services has dropped by nearly 15%.
As a result, a quarter of every dollar spent by the state in 2020 went to propping up Illinois’ pension obligations. That amount increased to nearly 30% of the total state budget in the fiscal year that began July 1.
Public pension reform received bipartisan support from state lawmakers and the governor in 2013. But a ruling in 2015 by the Illinois Supreme Court means the only way to achieve it for Illinois state and local governments is through a constitutional amendment.
Pension reform is the greatest step Illinois could take to control the constant upward creep of sales and other taxes.