Illinois taxes capital gains at 4.95%. Combined with federal taxes, your effective rate on a home sale could reach 23.8%.
IL State Rate
4.95%
Flat tax rate
Federal Rate
15%
Most common long-term bracket
Combined Effective
23.8%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Illinois is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Illinois don't qualify for the exclusion. You'll owe 4.95% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Illinois, homes sold in October sell for 13% more than those sold in January (-17%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Illinois and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
| 3.05% | $4,575 | Flat tax rate | |
| 3.8% | $5,700 | Flat tax (2026) | |
| 4% | $6,000 | Flat tax rate | |
| 4.8% | $7,200 | Top marginal rate | |
IllinoisYou | 4.95% | $7,425 | Flat tax rate |
| 7.65% | $11,475 | Top rate; 30% deduction for long-term gains |
Selling in Indiana instead of Illinois would save $2,850 in state tax on a $150K gain.
Illinois taxes capital gains at a flat 4.95% rate. The state does not distinguish between short-term and long-term gains. All capital gains are treated as ordinary income.
The Chicago metro area drives most of the state's real estate activity. Property values vary enormously, from affordable downstate markets to multi-million dollar properties on the North Shore and in Lincoln Park.
Illinois also has some of the highest property taxes in the nation, which can indirectly affect capital gains by limiting home price appreciation in some markets.
Investment property sellers should be aware that Illinois does not offer any special deduction or credit for capital gains, making the effective rate 4.95% on all taxable gains.
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