Illinois vs Texas Taxes: Complete Comparison + Calculator
Illinois vs Texas Taxes 2026: Complete Comparison + Savings Calculator
Chicago to Austin. Chicago to Dallas. It's one of the biggest migration patterns in America, driven largely by corporate relocations (Boeing, Caterpillar, Citadel) and remote work opportunities.
Key Fact: An Illinois resident earning $100,000 pays $4,950 in state income tax. A Texas resident pays $0. Add Chicago's sky-high property taxes, and the difference becomes enormous.
Quick Comparison Table
| Tax Category | Illinois | Texas | Winner |
|---|---|---|---|
| State Income Tax | 4.95% (flat) | 0% | ⭐ Texas |
| Chicago Income Tax | None | N/A | ⭐ Tie |
| Sales Tax (State) | 6.25% | 6.25% | ⭐ Tie |
| Sales Tax (Chicago) | 10.25% | 8.25% (Dallas/Austin) | ⭐ Texas |
| Property Tax (Avg) | 2.08% (#2 highest!) | 1.60% | ⭐ Texas |
| Total Tax Burden | 11.0% | 8.6% | ⭐ Texas |
| Estate Tax | Yes ($4M exemption) | None | ⭐ Texas |
Bottom Line: Texas wins on income tax, property tax, and estate tax. Illinois wins on... nothing tax-related.
Total Federal Tax
$16,712
Effective Tax Rate
16.71%
Your Tax Bracket
22%
Marginal tax rate on next dollar earned
Tax Breakdown by Bracket
2026 Tax Brackets (Single)
Income Tax: Simple Math, Big Difference
Illinois Income Tax 2026
Illinois has a flat 4.95% tax on all income. Simple, but not cheap.
Everyone pays 4.95%:
- $50,000 income = $2,475 tax
- $100,000 income = $4,950 tax
- $200,000 income = $9,900 tax
- $500,000 income = $24,750 tax
No brackets. No preferences. Just 4.95% on everything:
- Wages
- Business income
- Capital gains
- Dividends
- Interest
- Retirement income (pension/IRA/401k)
The only "progressive" element: $2,775 personal exemption per person (barely makes a dent)
Texas Income Tax 2026
NO STATE INCOME TAX
$0 on all income, forever.
Income Tax Savings: IL → TX
| Income | IL Tax (4.95%) | TX Tax | Annual Savings |
|---|---|---|---|
| $50K | $2,475 | $0 | $2,475 |
| $75K | $3,713 | $0 | $3,713 |
| $100K | $4,950 | $0 | $4,950 |
| $150K | $7,425 | $0 | $7,425 |
| $200K | $9,900 | $0 | $9,900 |
| $300K | $14,850 | $0 | $14,850 |
| $500K | $24,750 | $0 | $24,750 |
Career Savings (30 years @ $150K):
- $222,750 in tax savings
- $828,000 if invested at 7% annually
Take Standard Deduction
$47,500
Standard deduction of $47,500 exceeds itemized deductions by $22,500
Standard Deduction
$47,500
Itemized Deductions
$25,000
Your total deductible expenses
🎉 NEW 2026 Senior Deduction (OBBBA)
$12,000 additional deduction for taxpayers 65+
Deduction Breakdown
2026 Standard Deduction Amounts
- • Single: $16,100
- • Married Filing Jointly: $32,200
- • Head of Household: $24,150
- • Single: $2,050 per condition
- • Married: $1,650 per person, per condition
- • $6,000 per taxpayer age 65+
- • Phases out at $75K (single) / $150K (married)
- • 6% reduction per dollar over threshold
💡 Optimization Tips
• You're benefiting from the NEW 2026 senior deduction - a valuable OBBBA provision
Property Tax: The Hidden Killer
This is where Illinois REALLY hurts.
Illinois Property Tax 2026
Average Effective Rate: 2.08% (#2 highest in USA, after New Jersey)
Chicago Area Rates:
- Cook County (Chicago): 2.0% - 2.3%
- Will County: 2.2% - 2.5%
- DuPage County: 2.0% - 2.2%
- Lake County: 2.1% - 2.4%
Real Examples:
- $400,000 Chicago home: ~$9,200/year
- $600,000 home: ~$13,800/year
- $800,000 home: ~$18,400/year
Plus: Assessments rise regularly, no Prop 13-style protections
Texas Property Tax 2026
Average Effective Rate: 1.60%
Major Cities:
- Austin: ~1.8%
- Dallas: ~1.9%
- Houston: ~2.0%
- San Antonio: ~2.1%
Homestead Exemption: $100,000 reduction for school taxes
10% Annual Cap: Increases limited to 10%/year with homestead
Real Examples:
- $400,000 home: ~$7,200/year (after homestead)
- $600,000 home: ~$10,800/year
- $800,000 home: ~$14,400/year
Property Tax Comparison
| Home Value | IL (Chicago) | TX (Austin) | Savings in TX |
|---|---|---|---|
| $400K | $9,200 | $7,200 | $2,000 |
| $600K | $13,800 | $10,800 | $3,000 |
| $800K | $18,400 | $14,400 | $4,000 |
Plus: Equivalent homes cost 30-50% less in TX vs Chicago
Sales Tax: Chicago is Brutal
Illinois Sales Tax
- State: 6.25%
- Chicago Total: 10.25% (one of highest in nation!)
- State: 6.25%
- County: 1.75%
- City: 1.25%
- Transit: 1%
Restaurant tax in Chicago: Additional 0.5% = 10.75% total
What's taxed: Most goods, some services
What's not: Groceries (1% only), prescription drugs
Texas Sales Tax
- State: 6.25%
- Austin/Dallas/Houston: 8.25%
- State: 6.25%
- Local: 2.0%
What's taxed: Most goods, some services
What's not: Groceries, prescription drugs, OTC drugs
Sales Tax Impact
$40,000 annual taxable spending:
- Chicago: $4,100 in sales tax
- Austin: $3,300 in sales tax
- Savings: $800/year in TX
Over-Withholding
$15,600
You're giving the IRS an interest-free loan. Expect a refund.
Estimated Tax Owed
$0
Total Withholding
$15,600
Recommended Action
Tax Calculation Breakdown
Payment Schedule
💡 Withholding Tips
• You're over-withholding by $15,600/year. Consider reducing to increase take-home pay
• Submit new W-4 form to your employer to adjust withholding by $600/paycheck
Real-World Scenarios
Scenario 1: Single Professional (Chicago → Austin)
Income: $120,000
Rents apartment
Spending: $40,000 taxable
Chicago Total:
- Income tax: $5,940
- Sales tax: $4,100
- Total: $10,040
Austin Total:
- Income tax: $0
- Sales tax: $3,300
- Total: $3,300
Savings: $6,740/year 🎉
Scenario 2: Family (Chicago Suburbs → Dallas)
Income: $200,000 (married)
$650,000 home
2 kids
Spending: $55,000 taxable
Chicago Suburbs Total:
- Income tax: $9,900
- Sales tax: $4,950
- Property tax: $14,950
- Total: $29,800
Dallas Total:
- Income tax: $0
- Sales tax: $4,538
- Property tax: $12,350
- Total: $16,888
Savings: $12,912/year 🎉
Total Child Tax Credit
$4,400
Refundable Portion
$0
Credit Breakdown
Refundable vs. Non-Refundable Credit
2026 Child Tax Credit Parameters
Credit Amounts
- • Per qualifying child (under 17): $2,200
- • Per other dependent (17+): $500
- • Refundable portion limit: $1,700/child
Phase-Out Thresholds
- • Single: $200,000
- • Married Filing Jointly: $400,000
- • Reduction: $50 per $1,000 over threshold
💡 Optimization Tips
• Your income is well below phase-out threshold - you're receiving full credit
Scenario 3: Business Owner (Chicago → Houston)
Income: $350,000
$800,000 home
Spending: $70,000 taxable
Chicago Total:
- Income tax: $17,325
- Sales tax: $7,175
- Property tax: $18,400
- Total: $42,900
Houston Total:
- Income tax: $0
- Sales tax: $5,775
- Property tax: $16,000
- Total: $21,775
Savings: $21,125/year 🎉
Your QBI Deduction (Section 199A)
$20,000
20% of your qualified business income
Estimated Tax Savings
$4,800
Based on your marginal tax bracket
QBI Deduction Breakdown
2026 QBI Deduction Parameters
Income Thresholds (2026)
- • Single/HoH: $201,775 threshold
- • Married Joint: $403,500 threshold
- • Phase-in range: $75,000 (single) / $150,000 (married)
Deduction Rules
- • Standard deduction: 20% of QBI
- • Limited to 20% of taxable income
- • W-2 wage limit may apply above threshold
- • SSTB restrictions for high earners
💡 Optimization Strategies
• Your income is below the threshold - no wage or SSTB limitations apply. Focus on maximizing QBI.
Scenario 4: Retiree (Chicago → San Antonio)
Income: $80,000 (pension + investments)
$500,000 paid-off home
Spending: $35,000 taxable
Chicago Total:
- Income tax: $3,960
- Sales tax: $3,588
- Property tax: $11,500
- Total: $19,048
San Antonio Total:
- Income tax: $0
- Sales tax: $2,888
- Property tax: $10,500
- Total: $13,388
Savings: $5,660/year 🎉
Which State Wins for You?
Texas is Better For:
✅ Everyone earning income (4.95% → 0%)
✅ Homeowners (lower property tax)
✅ Business owners (no state corporate tax either)
✅ Retirees (no tax on retirement income)
✅ Those building wealth (keep more to invest)
✅ People who like warm weather year-round
Illinois is Better For:
✅ Those whose careers require Chicago (certain finance, trading, transportation jobs)
✅ Public transit users (Chicago's L system excellent)
✅ Four-season lovers (real winters, beautiful falls)
✅ Those with deep Chicago roots
Honestly, Texas wins for almost everyone from a tax perspective.
Special Considerations
Corporate Relocations: Major companies have moved HQs from Illinois to Texas:
- Boeing (Chicago → Arlington, VA, but many to TX)
- Caterpillar (Peoria → Irving, TX)
- Citadel (Chicago → Miami, but TX also popular)
Illinois Budget Crisis: Illinois has massive pension obligations and budget deficits. Future tax increases are likely.
Texas Concerns:
- Property taxes keep rising (10% cap per year)
- No state income tax is constitutionally protected
- Strong economy, growing population
Establishing TX Residency:
- Move permanently (183+ days)
- Get TX driver's license
- Register vehicles
- Register to vote
- Update all addresses
- File declaration of residency
Illinois isn't as aggressive as CA/NY about auditing former residents, but document your move anyway.
Cost of Living Beyond Taxes
More Expensive in IL:
- Property taxes (dramatically)
- Sales tax (Chicago)
- Gas prices
- Heating costs
- Groceries
- State income tax (obviously)
More Expensive in TX:
- AC costs (hot summers)
- Car ownership (required most places)
- Home insurance (higher than IL)
Overall: Texas is typically 25-35% cheaper than Chicago area for equivalent lifestyle.
FAQ
Q: Why does Texas have no income tax?
Historical oil/gas revenue, constitutional prohibition, and culture of limited government. Property/sales taxes fund government instead.
Q: Will Texas ever add income tax?
Extremely unlikely. Would require constitutional amendment approved by voters. Texans fiercely oppose it.
Q: What about Chicago's pension crisis?
Real concern. Property taxes keep rising to fund pensions. More increases likely, making TX even more attractive.
Q: Is Austin getting too expensive?
Yes, home prices have skyrocketed. But still cheaper than Chicago, and you save massively on income tax.
Q: What about Texas' power grid issues?
Valid concern after 2021 freeze. However, most of the time it's fine. Modern problem for modern infrastructure.
Q: How does weather compare?
- Illinois: Cold winters (-20°F possible), hot humid summers (90s)
- Texas: Mild winters (40s-50s), very hot summers (100°F+)
- TX wins if you hate snow; IL wins if you hate extreme heat
Conclusion
For virtually everyone, Texas offers better tax treatment than Illinois—saving $5,000-$25,000+ annually for most households.
A Chicago family earning $200K with a $650K home saves $12,912/year moving to Dallas. Over 30 years: $387,360 (or $1.4 million invested at 7%).
Illinois offers great culture, four seasons, and Chicago's world-class city experience. But the tax burden is heavy and likely to get heavier.
Calculate Your Exact Savings:
Total Federal Tax
$16,712
Effective Tax Rate
16.71%
Your Tax Bracket
22%
Marginal tax rate on next dollar earned
Tax Breakdown by Bracket
2026 Tax Brackets (Single)
Take Standard Deduction
$47,500
Standard deduction of $47,500 exceeds itemized deductions by $22,500
Standard Deduction
$47,500
Itemized Deductions
$25,000
Your total deductible expenses
🎉 NEW 2026 Senior Deduction (OBBBA)
$12,000 additional deduction for taxpayers 65+
Deduction Breakdown
2026 Standard Deduction Amounts
- • Single: $16,100
- • Married Filing Jointly: $32,200
- • Head of Household: $24,150
- • Single: $2,050 per condition
- • Married: $1,650 per person, per condition
- • $6,000 per taxpayer age 65+
- • Phases out at $75K (single) / $150K (married)
- • 6% reduction per dollar over threshold
💡 Optimization Tips
• You're benefiting from the NEW 2026 senior deduction - a valuable OBBBA provision
Over-Withholding
$15,600
You're giving the IRS an interest-free loan. Expect a refund.
Estimated Tax Owed
$0
Total Withholding
$15,600
Recommended Action
Tax Calculation Breakdown
Payment Schedule
💡 Withholding Tips
• You're over-withholding by $15,600/year. Consider reducing to increase take-home pay
• Submit new W-4 form to your employer to adjust withholding by $600/paycheck
Your Earned Income Tax Credit
$4,250
Credit being phased out
EITC Credit Breakdown
Income Analysis
2026 EITC Parameters
Maximum Credits (2026)
- • No children: $664
- • 1 child: $4,427
- • 2 children: $7,316
- • 3+ children: $8,231
Key Requirements
- • Must have earned income
- • Investment income limit: $11,950
- • Must file tax return (even if not required)
- • Valid Social Security number required
💡 Optimization Tips
• Your credit is being reduced by $177.378 due to phaseout
• Consider tax-deferred retirement contributions to reduce AGI and increase EITC
AMT Owed
$0
Total Tax Liability
$65,000
AMT Calculation Breakdown
2026 AMT Parameters
- • Single: $90,100
- • Married Joint: $140,200
- • Single: $500,000
- • Married Joint: $1,000,000
- • Phaseout rate: 50% (increased from 25%)
- • 26% on first $244,500
- • 28% on excess over $244,500
Last Updated: January 2, 2026 | Tax Year: 2026
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