Illinois tax rates rank No. 1: highest in U.S.

Illinois tax rates rank No. 1: highest in U.S.

Illinoisans now pay the highest combined state and local tax rates in the nation. Those taxes take more than 15% of their household income each year.

Illinois now levies the nation’s highest state and local tax rates on residents, costing each household $9,488 – or more than 15% of their annual income – in 2022, a new WalletHub report found. 

That tax load is nearly 39% more annually than the nation’s average.

The study also found Illinois state and local governments levy the nation’s second-highest gas taxes and second-highest effective property taxes on residents.

Despite being asked to pay more than anyone else, the state’s worst-in-the-nation pension debt eats dollars that should be spent on improvements to public services – the things residents expect their taxes to be used for. Illinoisans are left watching their tax bills climb while their tax dollars are diverted to cover $219 billion in pension promises made by politicians. 

Illinois’ No. 2 in the nation property taxes illustrate the issue. 

When cities and towns face dangerously high pension costs, they are forced to raise property taxes to cover shortfalls on debt payments. As a result, residents pay more in taxes towards past government services but don’t see benefits from current government services. They are more likely to see cuts to services as the old pension debts consume the new taxes. This often forces low-income families out of home ownership, or out of the state altogether. 

In the state capital of Springfield, 112% of property taxes go towards public pensions. Each household would have to pay $38,813 to eliminate all state and local pension debt. This average pension debt is even higher in nine other large municipalities, highlighting the pervasiveness of the state’s pension crisis. 

When these pensions eat up more property tax dollars, less funding is left for essential services such as schools – unless taxes are increased. State teachers’ pension payments have grown 225% since 2000, now consuming 39 cents of every K-12 education dollar spent by the state in 2022. 

As bad as the tax burden is, Amendment 1 on the ballot Nov. 8 would guarantee Illinoisans’ total tax burdens continue to grow as pensions crowd out a greater share of state and local spending. The public union-backed change to the Illinois Constitution would protect union power and prevent it from ever being diminished without another statewide vote. 

If approved, the amendment would give public unions the power to bargain over a nearly limitless range of subjects and with protections that overpower state law. Taxpayers would ultimately be asked to foot the bill on ever-greater union demands being granted by the politicians whose campaigns those unions fund. 

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