Illinois Income Tax: How it Breaks DownFebruary 8th, 2011
Many Illinois residents have been left scratching their heads after the legislature last month raised the income tax to a historically high level, in order to offset the state's reportedly $15 billion budget deficit. One of the more helpful pieces of advice on the tax hike comes from Francine Knowles of the Chicago Sun-Times in an article on the “Give and take of taxes.” As the article points out, here are the basic facts regarding the Illinois income tax situation:
With the Social Security tax break currently in place, many Illinois residents may not immediately feel the effects of the higher income tax. That is, as long as their employers can hold their own against the heightened corporate tax without lay-offs or—more drastically—can avoid moving headquarters to a new state. That scenario may seem far-fetched, unless you’re a business owner yourself. Illinois' Southern Business Journal published an interesting commentary about the Illinois income tax this week raising the question: “Does this now mean that Illinois businesses are ripe for the picking?”
“Some states are hiring sales reps with the goal of luring away Illinois companies,” the article continues. “Other states, like Wisconsin, are rolling out new ad campaigns aimed at attracting Illinois businesses. Wisconsin’s new campaign reads, ‘Escape to Wisconsin. You are welcome here.’ Ouch!”
If you are self-employed or are a business owner, you should specifically address these new tax changes with your tax advisor. They should be able to help you calculate how heavy a burden the changes could place on you in 2011 and beyond.