Chicago Local Tax Guide (2026)
Workers in Chicago pay Illinois’ flat 4.95% state income tax plus federal tax — nothing to the city. The state constitution flatly bars a local income tax, so no Illinois city or county can tax earnings.
Verified 2026-08-21 against official city / state sources. Where a 2026 rate could not be individually re-verified, the verified year and source are stated instead of a guess.
Quick answer (Chicago, 2026)
No — Chicago has no city income tax. The Illinois Constitution (Art. VII §6(e)) forbids home-rule municipalities from taxing income unless the state legislature authorizes it, and Illinois has never done so. Chicago’s local revenue comes from its 10.25% combined sales tax, property tax, and targeted fees. Source: Illinois Constitution, Article VII §6(e) — home rule units may not tax income without legislative authorization (retrieved 2026-08-21).
What you actually pay
The Illinois Constitution prohibits home rule units (including Chicago and Cook County) from taxing income or earnings unless the General Assembly passes a law granting that power — which it has never done.
No local withholding line exists on an Illinois pay stub; the only income taxes withheld are federal and the flat 4.95% state tax.
Chicago’s combined sales tax rate of 10.25% (6.25% state + 1.75% Cook County + 1.25% city + 1% RTA) is among the steepest in the U.S.
Instead of a local income tax, Chicago receives a share of state income tax collections through the Local Government Distributive Fund.
Illinois income tax is flat: every taxpayer pays 4.95% on net income, so there are no brackets and no local add-on. Cook County, which contains Chicago, also has no income tax.
Because there is no local income tax, there is nothing to reconcile at the city level: an Illinois resident files one state return (IL-1040) and one federal return.
Chicago revenue instead leans on property tax, the combined 10.25% sales tax, and a web of fees — restaurant, parking, and amusement taxes among them.
The Illinois flat rate means two workers with the same net income pay the same state tax whether they live in Chicago, Springfield, or rural Illinois; the difference shows up in property and sales taxes, not income tax.
A Chicago worker sees federal income tax and the 4.95% Illinois state tax withheld, plus FICA — and no city income-tax line. The city cannot tax wages because the state constitution forbids it.
Chicago property taxes are among the highest in the country and fund a large share of city and county services; that burden shows up in housing costs rather than in an income-tax line.
This guide summarizes structural facts for planning. It is not a substitute for the official Illinois tax code or a licensed preparer.
Frequently asked questions
Related state guide
Not tax, legal, or financial advice
FiscTalk provides general educational information from public sources. Tax outcomes depend on your full facts, filing history, and jurisdiction-specific rules that change yearly. Before filing or making decisions, consult a licensed CPA, EA, or attorney. FiscTalk is not a fiduciary and is not affiliated with the IRS or any state agency.
Sources & methodology
- Illinois Constitution, Article VII §6(e) — home rule units may not tax income without legislative authorization — Illinois General Assembly