By: Ted Dabrowski and John Klingner
We recently wrote about Illinois’ increasingly worsening competitive position as states across the country slash their personal income tax rates and move toward lower and flatter tax structures. All of our neighbors have also cut their rates and most now have lower and flatter rates than we do. It’s just one of the reasons Illinois has bled so many people to other states.
But it’s not just Illinoisans that are taxed too much. The state’s big companies are also stuck paying a punitive corporate income tax rate. The Tax Foundation just came out with its latest state tax survey and found Illinois has the 3rd-highest corporate income tax rate in the nation, behind only New Jersey and Minnesota.
We spoke with the Tax Foundation’s Senior Policy Analyst & Research Manager Katherine Loughead, who explained why the high tax is bad for Illinoisans:
“Ultimately, corporate income taxes are a tax on people. They fall on consumers in the form of higher prices, on employees in the form of lower wages and on investors in the form of lower returns on investment. Illinois’ high corporate income tax rate hinders economic growth, and hurts consumers and employees that want to save and invest for the future.”
Illinois corporations are required to pay 9.5% of their net income each year to the state. That’s about double what businesses in some of Illinois’ neighboring states pay. Kentucky imposes a tax of 5.0%, Indiana, just 4.9%. Missouri’s 4.0% ranks in the nation’s bottom ten rates.
Illinois stands with just three other states – Alaska, Minnesota, and New Jersey – that levy top rates of 9% or higher.
Even worse, Illinois is becoming even less competitive as more and more states slash their corporate tax rates. In 2025 alone, four states – Louisiana, Nebraska, North Carolina, and Pennsylvania – cut their corporate tax rates. And “15 states, including Indiana and Iowa, have reduced their corporate income tax rate over the past four years,” Katherine told us.
Only two states raised their rates in 2025 – New Mexico and New Jersey. New Jersey is notable as its 2.5% hike pushed the state’s top rate up to 11.5% – retaking the crown as the nation’s highest rate.
Our state politicians refuse to make Illinois a welcoming state for investors and job creators. Instead, they’re talking about even more tax hikes. The obstacles for existing Illinois businesses keep piling up on top of one another.
It’s little wonder big companies like Boeing, Citadel, Morton Salt, Tyson and Caterpillar have divested from Illinois in recent years. Why pay the third-highest tax rate when you can pay half that in a state like Florida – or no tax at all if you move to Texas?
Read more from Wirepoints:
- As Illinois politicians keep pushing progressive tax schemes, other states keep dumping them. Louisiana is the latest.
- Gov. Pritzker’s grocery tax shuffle
- Pritzker admin’s past and future spending excesses mean $23 billion in upcoming deficits
- Don’t look now, but here come the tax hikes on Illinoisans
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
Do a top 10 on what this LOL (Lack Of Leadership) governor JB has done to this state. Are there any good things?
What usually goes unsaid during any discussion of corporate taxes is the fact that “corporations don’t pay taxes, only people do”. Corporations just pay for their increased taxes by raising the prices of the goods they sell and they also pay their workers less. Democrats know this but don’t care, simply because they’re anti-working class but pro-political class. If Hyatt Corp. had their taxes raised by 20% everywhere they have a hotel, do you think that their room rates would stay the same? Would their workers get a nice raise or bonus st the end of the year? So Illinois’… Read more »
That can’t be said often enough.
Not quite true. Businesses can only raise their prices as high as the market will bear. If they are higher than the competition, they lose the business to someone else. The choice then becomes move to a lower cost state or get out of the business.
Respectfully, you are saying the same thing as I am. Decisions to raise their prices, pay their workers less, move to a low cost state, or get out of the business all fall on people, not the corporation.
It’s no different than when Illinois keeps raising the property taxes on individuals. The taxpayer has to make adjustments in their life to pay the tax, but it all falls on them to pay the state. When a corporation has to make adjustments to pay an increased tax, no matter which method they choose, it ultimately falls on individuals, not the corporation.
And among tax professionals, IDOR has the reputation of being the worst of all the state taxing agencies. The employees at IDOR work 9-4:30 an not a second longer. It can take weeks or months, if never, to get someone there to address your issue. They frequently make mistakes and arrogantly don’t care. The last year or two, one mistake they’ve made over and over again, is accepting the tax payment due 4/15…sitting on the check or transfer for a month, and then issuing a late notice with penalties. Good luck trying to fix this situation. They also miscalculate corporate… Read more »
Five years after thinking I had paid my tax ($218) i get a $4,000 plus bill. They figured my initial tax wrong (claimed it was $1,200) and added fees interest. How the heck is that legal. Wait five years to tell someone they owe and charge interest. I’ve about given up trying to resolve.
They get charged on their income, charge sales tax on their goods/services, and consumers that ultimately buy their products pay for them with income that is already taxed. When I go out to eat I always tip in cash because I already paid income tax on the gratuity.
High taxes make business less competitive on the national level.
Illinois needs money so badly to cover generous pensions expect them to go even higher.