* Not a great way to describe the newly proposed income tax rates…
The governor’s proposed tax rates are as follows:
• 4.75 percent for those making $0-10,000 in income
• 4.90 percent for those making $10,001-$100,000
• 4.95 percent for those making $100,001-$250,000
• 7.75 percent for those making $250,001-$500,000
• 7.85 percent for those making $500,001-$1,000,000
• 7.95 percent for those making over $1,000,000
* A decent way to describe the newly proposed rates…
• The first $10,000 in net income is taxed at 4.75 percent, resulting in a maximum $475 in income taxes.
• For the next $90,000 in income a 4.9 percent rate is applied, resulting in up to $4,410 in taxes. People claiming $100,000 a year would pay $4,885, $65 less than what they pay under the current income tax law. The average annual income in Illinois is a little more than $56,000, according to the U.S. Bureau of Labor Statistics.
• The next $150,000 of income is taxed at 4.95 percent, which adds up to another $7,425 more in taxes. Someone claiming $250,000 a year in taxable income would owe $12,310, also $65 less than under the current law. More than 97 percent of all income tax returns filed in Illinois claim income of $250,000 or less, according to Pritzker.
• The tax rate jumps all the way up to 7.75 percent for the next $250,000 of income, which could amount to as much as $19,375 more in income taxes. People claiming $500,000 in income would owe $31,685, which is $6,935 more than what they would pay with the current flat income tax rate. […]
Retirees would not be affected because Illinois is one of the few states that doesn’t tax retirement benefits.
* Another decent way…
The plan proposes dropping the personal tax rate for the first $10,000 of income for single and joint filers to a 4.75 percent rate; income above $10,000 to $100,000 would be taxed at 4.9 percent; income between $100,000 and $250,000 would be taxed at 4.95 percent; income between $250,001 and $500,000 would be taxed at 7.75 percent; and income from $500,001 to $1 million would be taxed 7.85 percent.
* Meanwhile, this is not a great way to explain the governor’s proposed higher corporate tax rate…
Under the new tax plan, Illinois would maintain a competitive corporate income tax rate. The proposed 7.95 percent rate, identical to its highest rate for personal income, would fall under the corporate income rates in California and Iowa. The two states levy 8.84 percent and 12 percent rates, respectively.
Wisconsin’s 7.9 percent corporate tax is just shy of Illinois’ proposed rate. New York has the lowest corporate income tax of the aforementioned states, at 6.5 percent.
* Same goes for Gov. Pritzker…
“They were paying a flat tax at 7 percent before, they’d be paying a flat tax again.”
Businesses also pay a Personal Property Replacement Tax of between 1.5 and 2.5 percent, depending on the company…
Corporations pay a 2.5 percent tax on their net Illinois income.
Partnerships, trusts, and S corporations pay a 1.5 percent tax on their net Illinois income.
So that has to be added to the corporate tax rate, bringing the newly proposed rate to between 9.45 and 10.45 percent, putting Illinois above California.
* Unpacking Pritzker’s Tax Proposals: Retail Discount: Stores in Illinois keep a portion of what you pay in sales tax. Think of it like a collection fee, though in state government shorthand it’s called a retail discount. The amount is based on a percentage of what they collect. So the more they sell, the more they keep. Gov. J.B. Pritzker wants to cap that amount to $1,000 per month for each retailer.