Whether choosing to live near family and friends or close to a major metropolitan area, active adults have plenty of reasons to retire in Northern Illinois. Most retirees also consider factors such as healthcare access, affordability, and climate when deciding where to find their next active adult community.
As an added benefit, most of the suburbs throughout the Chicagoland Area provide convenient access to downtown Chicago with its world-class public transportation, museums, cultural events, and restaurants. The shores of Lake Michigan allow for some of the best freshwater boating, fishing, and swimming in the Midwest.
While a day in the city might always be within reach, the 62 active adult communities throughout Northern Illinois allow retirees to enjoy an active social lifestyle right in their own neighborhood. Thanks to these affordable communities and some tax benefits for retirees, active adults can retire in Illinois on a budget and still enjoy a high quality of life. If you’re planning for an Illinois retirement, here’s what you need to know about taxes.
Sales Tax: 6.25 percent with local taxes averaging around 2.49 percent
Income Tax: 4.95 percent
Retirement Income Tax: None
Gas Tax: 38 cents per gallon, 45.5 cents total for diesel
Estate Tax: Taxes only apply for estates valued at $4 million and over; information on graduated tax rates is available here
Inheritance Tax: None
The property tax rate in Illinois is one of the highest in the country at 1.95 percent. This follows New Jersey at 2.11 percent and New Hampshire at 1.99 percent. However, 65+ residents who earn less than $50,000 each year can take advantage of the Senior Citizens Homestead Exemption or Senior Citizens Assessment Freeze Homestead Exemption.
Learn more about property tax exemptions here.
As a benefit to retirees, The Prairie State exempts nearly all retirement income from taxes. This includes Social Security benefits, public and private pension income, retirement savings accounts (including 401(k) and IRA), and lump-sum distributions. Military benefits for retired veterans are also not taxed in Illinois.