Illinois Tax Exemptions

Illinois provides a variety of tax exemptions and relief programs across income, sales, and property taxes.

These programs are designed to reduce the tax burden for eligible individuals, seniors, veterans, and organizations.

Illinois Income Tax Exemptions

Illinois uses a personal exemption system rather than a standard deduction to lower taxable income. Key provisions for the tax year include:

• Personal Exemption Allowance: Taxpayers and their dependents can claim a personal exemption of $2,850 each.
• Additional Exemptions: Taxpayers or spouses who are 65 or older or legally blind may claim an extra $1,000 exemption.
• Income Limits: Personal exemptions phase out for taxpayers with a federal Adjusted Gross Income (AGI) over $250,000 for single filers or $500,000 for married couples filing jointly.

Exempt Income

Certain types of income are fully exempt from Illinois’ flat 4.95% income tax:

• Social Security benefits.
• Most retirement and pension income, including 401(k) and IRA distributions.
• Active duty and retired military pay.
• Interest from U.S. Treasury bonds and specific Illinois government obligations.
• Earnings from qualified college savings programs such as Bright Start and College Illinois.

Illinois Sales Tax Exemptions

Illinois also offers exemptions from sales tax on certain goods, services, and transactions:

• Prescription medications and qualifying food items (state portion eliminated in 2026).
• Medical appliances, including wheelchairs, hearing aids, prosthetics, and artificial limbs.
• Equipment and supplies used in manufacturing and farming.
• Newspapers and magazines.
• Purchases by charitable, religious, educational, and government organizations with approved exemption numbers issued by the Illinois Department of Revenue.

Illinois Property Tax Exemptions

Property tax relief is available through exemptions that lower the equalized assessed value (EAV) of your principal residence:

• Homeowner Exemption: Automatically available to most primary homeowners.
• Senior Citizen Exemption: Provides additional reductions for homeowners age 65 or older.
• Low-Income Senior Citizens Assessment Freeze: For seniors meeting the standard exemption criteria with a total household income of $65,000 or less; requires annual renewal.
• Persons with Disabilities Exemption: Available to homeowners with a certified disability.
• Veterans with Disabilities Exemption: Substantial relief for veterans with a service-connected disability rating from the U.S. Department of Veterans Affairs.
• Home Improvement Exemption: Allows up to $75,000 of added home value from improvements to be exempt from taxation for up to four years.

Electronic Filing Recommendation

Filing electronically through the Illinois Department of Revenue (IDOR) website or approved e-filing software is recommended:

• Faster processing: Electronic submissions are processed more quickly than paper forms.
• Reduced errors: Built-in calculators and error-checking features minimize mistakes that could delay refunds.
• Secure refunds: Direct deposit options allow faster access to refunds.
• Access to forms and records: Electronic filing provides digital copies of your return for future reference.

For more information, forms, and eligibility requirements, visit the Illinois Department of Revenue website or contact your local County Assessor’s Office.