All-items parity
100.0
US = 100.0
Illinois (IL) | All-items parity 100.0
Illinois Cost of Living 2026
Illinois reads 100.0 on the BEA all-items price parity for 2024, which makes it the rare state priced almost exactly at the national average. The headline hides a split personality: housing rents parity is just 93.9 because a $280,700 median home is cheap for a state containing the nation's third-largest metro, while the effective property tax of 1.97% is the second-highest in the country. Chicago and its collar counties run well above the state figure; Springfield, Peoria and downstate run far below it.
Flat 4.95% income taxRetirement income untaxedProperty tax 1.97% effective
Median Home
$280,700
2BR rent $1,333/mo
Median Income
$83,211
Household, Census ACS
Category breakdown
The four BEA price parities vs the nation
| Category | IL index | National avg | Difference |
|---|---|---|---|
| All items | 100.0 | 100.0 | 0.0% |
| Services: housing rents | 93.9 | 100.6 | -6.7% |
| Goods | 103.8 | 99.6 | 4.2% |
| Services: utilities | 85.0 | 98.4 | -13.6% |
| Services: other | 100.2 | 100.1 | 0.1% |
U.S. Bureau of Economic Analysis publishes these four component parities and no others. There is no federal grocery, healthcare or transportation price parity, so this table shows none. Food at home sits inside Goods; medical and transport services sit inside Services: other.
Sources: BEA Regional Price Parities by State (table SARPP), 2024 reference year, U.S. Bureau of Economic Analysis. Census ACS 2024 1-year (median income, home value), Illinois Department of Revenue (income and sales tax), Tax Foundation (effective property tax), EIA (electricity rates), KFF (uninsured rate).
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Pros / offsets
What works in Illinois.
Big-metro amenities at mid-pack prices. A $280,700 median home and $1,333 median two-bedroom rent are numbers most coastal metros have not seen in a decade, yet the state contains Chicago, two international airports and a deep white-collar job market. Median household income of $83,211 sits slightly above the US median of $81,604.
Retirement income is not taxed at all. Illinois exempts Social Security, pensions, 401(k) and IRA withdrawals from its income tax entirely, one of the most generous retirement carve-outs of any state that levies an income tax. For a retiree the flat 4.95% headline rate can be largely irrelevant.
A flat, predictable income tax. The Illinois constitution requires a flat rate, currently 4.95%. There is no bracket creep and payroll planning is simple; a 2020 ballot measure to allow graduated rates was rejected by voters.
Cheap utilities for the region. The utilities parity of 85.0 is well below the national level, helped by nuclear generation covering roughly half of the state's electricity. An average monthly electric bill of $118 undercuts most neighboring states.
Cons / drivers
Where Illinois costs more.
Property tax is the catch. At 1.97% effective, Illinois trails only New Jersey. On the $280,700 median home that is roughly $5,500 a year, and in the Cook County collar counties (DuPage, Lake, Will) bills on ordinary homes routinely exceed $8,000. The low sticker price of Illinois housing is partly a capitalization of that tax.
Sales tax stacks high in Chicago. The state rate is 6.25%, but home-rule cities and counties layer on top; combined rates in Chicago reach about 10.25%, among the highest of any large US city. The state's 1% grocery tax was abolished from 1 January 2026, though home-rule municipalities may impose their own local version.
Population outflow and fiscal pressure. Illinois has lost residents for most of the past decade, and unfunded public pension liabilities are the structural reason property taxes stay high. Buyers should assume the tax burden is persistent, not cyclical.
Chicago premium vs downstate reality. The statewide average blends two different markets. Cook County and the collar counties price housing, childcare and services well above the 100.0 parity; metro Chicago childcare in particular runs near coastal levels.
Tax + benefit signals
Illinois tax and access overview
State income tax
4.95%
Graduated or flat
Property tax effective
1.97%
Of assessed value, annual
Sales tax (state)
6.25%
Local can add 1-4% more
Uninsured rate
6.2%
Medicaid: expanded
Your take-home pay in Illinois
Federal, Illinois and any local income tax on your salary, per paycheck.
The mortgage on a $280,700 home
Monthly payment at today’s rates with Illinois property tax (1.97%) and average home insurance.
Metro variation
State averages mask city variation.
Illinois averages 100.0 on the BEA all-items parity, but the state is really Chicago plus everywhere else:
Chicago (Cook County): The priciest market in the state. North Side and suburban North Shore housing carries a significant premium, and combined sales taxes are about 10.25%. Transit access (the L and Metra) lets many households run one car or none, which claws back some of the premium.
Collar counties (DuPage, Lake, Will, Kane): Strong schools and commuter rail, with property-tax bills to match; effective rates here are among the highest in the nation even by Illinois standards.
Springfield, Peoria, Rockford, downstate: Median homes commonly sit between $120,000 and $200,000, far below the state figure. Downstate Illinois prices like the rural Midwest, not like Chicagoland.
The state average over-weights Chicagoland by population, so most of the land area of Illinois is cheaper than the number suggests.
Frequently Asked
Illinois cost of living, answered
Why are Illinois property taxes so high?
The short answer is local government structure and pensions. Illinois has nearly 7,000 units of local government, more than any other state, and school districts fund a large share of their budgets from property levies because state support has historically lagged. Decades of underfunded public pensions add pressure. The result is a 1.97% effective rate per the Tax Foundation, second only to New Jersey, roughly $5,200 a year on the median Illinois home.
Does Illinois tax retirement income?
No. Social Security benefits, public and private pensions, 401(k) withdrawals and IRA distributions are all fully exempt from Illinois income tax. That makes Illinois unusually retiree-friendly on income despite the flat 4.95% rate on wages, and it is a major reason some retirees stay put despite the property-tax burden. Property taxes, not income taxes, are the number a retired Illinois homeowner should budget around.
How expensive is Chicago compared with the rest of Illinois?
Substantially. The state parity of 100.0 blends Chicagoland, where housing, childcare and services price well above the national average, with downstate metros like Springfield, Peoria and Decatur where median homes often sell between $120,000 and $200,000. Combined sales tax in Chicago is about 10.25% against 6.25% at the state level. If your job is remote, the arbitrage between Chicago wages and downstate prices is one of the strongest in the Midwest.
Is there still a grocery tax in Illinois?
The statewide 1% grocery tax was eliminated on 1 January 2026. However, the repeal allowed home-rule municipalities to enact their own local 1% grocery tax to replace the lost revenue, and a number have done so, so the till price depends on the town. On spending rather than tax, Illinois households average $397 a month on groceries, close to the national norm.
How does the Illinois flat tax work?
Illinois levies a single 4.95% rate on taxable income regardless of how much you earn; the state constitution prohibits graduated brackets, and a 2020 constitutional amendment to change that was rejected by voters. There is a small per-exemption allowance, and retirement income is excluded entirely. For a two-earner household on $120,000, Illinois income tax is roughly $5,600 before credits, simpler but less progressive than neighboring Wisconsin or Minnesota.
Is moving to Illinois worth it financially?
It can be, if you are housing-led. The median home at $280,700 against a median income of $83,211 gives Illinois one of the best big-metro price-to-income ratios in the country. The offsets are the 1.97% property tax and, in Chicago, stacked sales taxes. Run your own two-state numbers in the /calculator, and weight property tax heavily if you plan to own.