Working families in Illinois are overburdened by the state's unfair tax code. For 40 years, Illinois' personal exemption hasn't kept up with the cost of living. Struggling Illinois families are feeling the burden. Studies have shown that Illinois has one of the most unfair tax codes in the country.* This is a once-in-a-lifetime opportunity to reform Illinois' tax code.
We must reform the state tax system to ensure fairness for working families.
The Facts: This plan provides tax relief for working families - the largest in a generation. Over five million Illinoisans will pay the same or less than before.
Increased Personal Exemption
When the state income tax was first enacted in 1969, the personal exemption was $1,000. For a family of four this was $4,000, approximately the same as the federal poverty level (FPL). The exemption for a family of four is now $8,000 - less than 38 percent of the FPL.
- Tripling the personal exemption - from $2,000 to $6,000 - will help families who are struggling and burdened by the state income tax during the recession.
- A family of four will pay no state income tax on the first $24,000 they earn.
Individual Income Tax
- This budget increases the individual income tax rate by 1.5 percentage points to 4.5 percent.
- Paired with a more generous personal exemption, many working families will now pay less than before.
| Family Income |
Current Tax* |
Proposed Tax* |
Amount Change |
Percentage |
| $30,000 |
$588 |
$162 |
-$426 |
-72% |
| $45,000 |
$1,002 |
$783 |
-$219 |
-22% |
| $60,900 |
$1,225 |
$1,225 |
$0 |
0% |
| $75,000 |
$1,373 |
$1,519 |
$146 |
11% |
| $100,000 |
$1,890 |
$2,295 |
$405 |
21% |
* Individual income taxes are calculated as a percent of Federal Adjusted Gross Income, which is estimated at 92% of total family income. Also assumes families with income above $60,000 benefit from deductibility of state income taxes on the federal return.
* Source: Institute on Taxation and Economic Policy, 2006