Illinois vs Texas Taxes
Compare the total tax burden between Illinois (4.95% flat) and Texas (no income tax). Enter your income to see which state saves you more.
Illinois vs Texas: Two high property-tax states, one big income tax difference
Illinois and Texas share an unusual trait among major states: both have some of the highest property tax rates in the country. Illinois averages about 2.07% and Texas about 1.60%. But that's where the similarity ends—Illinois also charges a flat 4.95% income tax on all earned income, while Texas has no income tax at all. For workers who rent or own modest homes, the income tax difference is the dominant factor, making Texas clearly cheaper.
This comparison has driven significant migration from Chicago to Dallas, Houston, Austin, and San Antonio. Between 2019 and 2023, Illinois was one of the top states for net domestic outmigration, losing residents at a rate of roughly 100,000 per year. Texas was the top destination. The appeal is straightforward: similar or lower cost of living, better job growth, and no state income tax.
Illinois' fiscal challenges compound the issue. The state has over $200 billion in unfunded pension liabilities, the worst of any state, creating pressure for future tax increases. In contrast, Texas benefits from energy revenue and a growing tax base. For workers evaluating long-term financial planning, the trajectory of each state's fiscal health matters as much as today's rates.
Key Differences Beyond Income Tax
| Category | Illinois | Texas |
|---|---|---|
| Property Tax | Effective rate ~2.07%; Cook County rates among highest in nation at 2.10%+ | Effective rate ~1.60%; no cap on reassessments; rates vary significantly by district |
| Sales Tax | Base rate 6.25%, combined up to 11% in Chicago (highest of any major US city) | Base rate 6.25%, combined up to 8.25%; grocery items taxed at reduced rate |
| Cost of Living | Chicago affordable by major-city standards; downstate IL very low cost; BUT high taxes offset savings | Houston and Dallas among most affordable large metros; Austin more expensive but still below Chicago |
| Retirement Income | Retirement income (Social Security, pensions, 401k) is fully exempt from state income tax | No state income tax on any income, including retirement |
| Fiscal Outlook | $200B+ in unfunded pension liabilities; credit rating among lowest of all states; risk of future tax increases | No state debt from income tax promises; rainy day fund over $15 billion; stable fiscal outlook |
Who Benefits from Moving?
Middle-income families renting in Chicago
A family earning $100K saves about $4,950 in state income tax by moving to Texas, with similar or lower property taxes if buying. Chicago's high combined sales tax rate (up to 11%) also tips the comparison toward Texas cities.
Young professionals comparing job markets
Texas's job growth significantly outpaces Illinois. Houston and Dallas offer strong opportunities in energy, healthcare, and tech. The income tax savings compound over a career—$5,000/year saved and invested for 20 years at 7% returns grows to over $200,000.
Pre-retirees concerned about state finances
Illinois exempts retirement income from state tax, so retirees face a smaller gap. But Illinois's pension crisis creates risk of future changes. Texas offers more fiscal certainty.
Bottom line: Both states charge high property taxes, but Illinois adds a 4.95% income tax on top. For a $120,000 household income, that's an extra $5,940 per year that Texas simply doesn't charge.
Tax at Different Income Levels
| Income | Illinois Total Tax | Texas Total Tax | Annual Savings |
|---|---|---|---|
| $75,000 | $16,619 | $13,687 | Save $2,933 |
| $100,000 | $25,269 | $21,099 | Save $4,170 |
| $150,000 | $43,187 | $36,542 | Save $6,645 |
| $200,000 | $60,006 | $50,885 | Save $9,120 |
Based on single filer, standard deduction, 2025 tax year. Includes federal income tax, state income tax, and FICA.
Why the difference
You'd save $4,170/year ($348/month) in Texas vs Illinois.
Tax structure
Illinois has a flat 5.0% state income tax, while Texas has no state income tax.
Effective rate at your income
At $100,000, Texas's effective state rate is 0.0% vs 4.2% in Illinois — a 4.2 percentage point gap.
Tip: The flat 4.95% rate means your effective state tax rate is close to 4.95% regardless of income — no progressive bracket benefit. Property taxes in Cook County (Chicago) can exceed $6,000-$10,000 on a median-value home.
Tip: While you save on income tax, Texas property taxes can exceed $5,000-$10,000/year on a median-priced home. Factor in property tax when comparing total tax burden against income-tax states where property taxes may be lower.
Understanding Each State
Illinois
Illinois has a flat income tax rate of 4.95% on all taxable income. While the rate is moderate compared to states like California or New York, Illinois's high property taxes (average ~2.08%, second-highest nationally) significantly increase the total tax burden, particularly for homeowners.
Tip: The flat 4.95% rate means your effective state tax rate is close to 4.95% regardless of income — no progressive bracket benefit. Property taxes in Cook County (Chicago) can exceed $6,000-$10,000 on a median-value home.
Texas
Texas has no state income tax, relying instead on property taxes (among the highest in the US at ~1.6-1.8% of home value) and an 8.25% combined sales tax in most areas. For wage earners, the absence of income tax is a major advantage, but property owners face a significant ongoing cost.
Tip: While you save on income tax, Texas property taxes can exceed $5,000-$10,000/year on a median-priced home. Factor in property tax when comparing total tax burden against income-tax states where property taxes may be lower.
Key Comparison Points
Income tax structure: Illinois has a flat income tax (4.95% flat), while Texas has no state income tax.
Beyond income tax: State tax comparisons should also consider property tax rates, sales tax, and cost of living. A state with no income tax may have higher property or sales taxes that offset the savings.
SALT deduction cap: Under OBBBA (2025+), the federal SALT cap is $40,000, phasing out above $500,000 MAGI toward a $10,000 floor. This limits the federal tax benefit of living in a high-tax state, so the gross state tax difference remains close to the net difference for most earners — especially high earners inside the phaseout.
Frequently asked questions
Is it cheaper to live in Illinois or Texas?
Based on income tax alone, Texas has a lower tax burden. At $100K income, you'd save $4,170 annually in Texas compared to Illinois. However, total cost of living also depends on property taxes, sales taxes, and housing costs.
How much would I save moving from Illinois to Texas?
A single filer earning $100,000 would save approximately $4,170 per year in total taxes by living in Texas instead of Illinois. At $150,000 income, the savings change to $6,645 per year.
What is the income tax rate in Illinois?
Illinois has a flat income tax with rates of 4.95% flat.
What is the income tax rate in Texas?
Texas has no state income tax.
Does Texas have income tax?
No, Texas does not levy a state income tax. Residents pay only federal income tax and FICA. However, Texas may have higher property taxes or sales taxes to compensate.