What would a state income tax hike cost you?
The Illinois House is expected to vote Thursday afternoon on whether to override Gov. Bruce Rauner's veto of a $5 billion income tax increase.
If it passes, the state's personal income tax rate will increase from 3.75 percent to 4.95 percent, bringing in revenue to help attack Illinois' $6 billion budget deficit and nearly $15 billion in past-due bills. Meanwhile, the corporate income tax rate would increase from 5.25 percent to 7 percent.
Rauner is imploring legislators not to override his veto, calling the tax increase and related budget bill a "disaster" that won't solve the state's many financial problems.
We asked SLHeeley Tax Preparation Services in Naperville, and Liberty Tax Service, which has dozens of suburban offices, to help estimate what the proposed personal income tax increase would cost Illinois residents.
Here are some examples:
• A single person who earns $34,000 a year would pay an additional $382 a year.
• A family of three making $75,000 a year would pay an additional $822 a year.
• A family of four earning $150,000 a year would pay an additional $1,695 a year.
• A 66-year-old retiree who has $5,000 in taxable earnings plus Social Security and pension income, which are not taxed in Illinois, would pay an additional $22 a year.
Each example assumes no major changes to the household from year to year, like having a baby or buying a house. Illinois allows a $2,175 deduction for each person and another $1,000 deduction for anyone 65 or older or for those legally blind. Homeowners can also take a credit equal to 5 percent of their property tax bill, among other credits.
Among neighboring states, Wisconsin's graduated income tax ranges from 4 percent to 7.65 percent, Indiana's is 3.23 percent, Iowa's ranges from 0.36 percent to 8.98 percent, Missouri's is 1.5 percent to 6 percent, and Kentucky's is 2 percent to 6 percent, according to the Tax Foundation.
Income taxes are higher on the East and West coasts, said Steven L. Heeley, of SLHeeley Tax Preparation Services in Naperville, and president of the Illinois Society of Enrolled Agents.
"It's the real estate taxes in Illinois that do the most damage to pocketbooks," he said.