Retiring in Illinois

Every figure below is sourced to Illinois’s own publications and dated. Estimates only, and not tax advice.

Retirement tax by state

What your state actually takes from a 401(k) withdrawal, a pension, and Social Security — in dollars, not a yes/no list.

Long-term index-fund growth after expense-ratio drag — and what your state takes from the gains at withdrawal.

Decided on the two rates that actually govern it — yours now, and yours at withdrawal, in the state you'll retire in rather than the one you're in.

2026 limits, employer match, the 60-63 super catch-up, and whether the Roth catch-up mandate applies to you.

When your RMDs start under SECURE 2.0, how much this year's is, and what missing it costs.

What a backdoor Roth conversion would actually cost you in tax — the pro-rata rule most calculators only describe.

The tax a leveraged rental owes inside a self-directed IRA — computed at trust rates, not the rate you'd assume.

401(k) and IRA withdrawals: Not taxed
Social Security: Not taxed
Top marginal rate: 4.95%; A flat rate on all taxable income.
Tax year: 2026; Brackets are legislated and change on a fixed calendar, so the year matters.

Illinois taxes wages, self-employment income, interest, dividends, and capital gains at 4.95% but taxes almost no retirement income, which makes the gap between an Illinois working-year effective rate and an Illinois retirement-year effective rate larger than in any neighboring state.
The subtraction is claimed on Form IL-1040 Line 5 and requires attaching pages 1 and 2 of the federal 1040 or 1040-SR; if federal lines 4b, 5b, and 6b do not clearly identify the retirement income, Form 1099-R must be attached as well.
The single flat rate is a constitutional feature, not an ordinary policy setting: Article IX, Section 3(a) of the Illinois Constitution requires a non-graduated rate on individual income, and the November 2020 ballot amendment that would have permitted a graduated tax was defeated.