Today Illinois residents are facing the new reality of a major state income tax rate hike. After Illinois lawmakers passed legislation to raise the personal state income tax from 3 percent to 5 percent – making it a whopping 67 percent tax increase.
In addition, business income tax was raised from 4.8 percent to 7 percent – a 46 percent tax increase.
The new income tax rates would be retroactive to January 1st and remain in effect until 2015. After 2015, the personal income tax rate will decrease to 3.75 percent and business to 5.25 percent.
Oftentimes the news of taxes going up is difficult to hear, especially when our economy is in rebound mode. And other states are facing budget shortfalls and managing to find other ways to close the budget gaps. After all, managing any budget requires tough decision making across the board (e.g. spending, expenses etc.).
Nonetheless, the Illinois budget woes are real and this appears to be the answer to –a historic deficit of at least $12 billion. With schools, social services and other state government funded programs/initiatives being underfunded and unpaid something had to be done. However, the question remains — was this the right answer?
In the words of Illinois Governor – Pat Quinn:
“We had an emergency, a fiscal emergency”
“Our fiscal house was burning.”
Watch CBS Chicago’s video below to see how the Illinois State Income Tax Hike impacts you:
What are your thoughts on the Illinois Income Tax Rate Hike?