Main Points

  • The Illinois Constitution currently requires a flat state income tax which means all individuals pay the same rate, currently 4.95%, and all corporations pay the same rate, currently 7%. A graduated income tax allows legislators to determine different rates for both individuals and corporations based on income earned.

  • In May 2019, the legislature approved a ballot referendum question calling for a constitutional amendment to change Illinois’ constitution from a flat income tax to a graduated income tax.  As a result, voters will be asked in the upcoming 2020 election whether Illinois should amend the constitution to move from a flat tax income to a graduated income tax. 
     
  • The amendment also repeals a critical taxpayer protection: the constitutional ban of more than a single tax on income. Future general assemblies will be allowed to tax the same dollar of income over and over.

  • Although the ballot question does not contain the new tax brackets, a separate piece of legislation establishing the rates under a graduated income tax system was approved by both Houses in the General Assembly and signed by the governor. Under the proposal, corporate income would be taxed at flat rate of 10.49%, the third-highest rate in the nation, while the highest bracket for pass-through business income would be taxed at 9.49%, the fourth highest in the nation. These rates will only go into effect if the voters approve the ballot referendum question.

  • It is difficult, if not impossible, to install a graduated income tax that raises substantial new revenues, without significantly increasing the tax burden on the middle class.

  • Given the adverse effect this proposal would have on job creators, the Chamber will be undertaking a number of advocacy efforts to inform voters of the misinformation about graduated income taxes and the damage a graduated income taxes would inflict on Illinois taxpayers.

  • Please visit the links on the side to learn more about the graduated income tax, how it could affect you, and how you can get involved. Please contact tdiers@ilchamber.org with any direct questions.