How to Calculate Taxable Income in Illinois
The Illinois Department of Revenue requires all resident taxpayers to pay a 3 percent tax on taxable income. Depending on your financial situation, your tax can be reduced by nonrefundable credits, such as taxes paid to another state, or you may be eligible for a refund if you qualify for refundable credits, such as the earned income credit. Generally, your taxable income, or net income, is your federal adjusted gross income minus any adjustments and credits for your exemptions. To calculate your taxable income, you must use the information from your federal income tax return.
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Instructions
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Visit the Illinois Department of Revenue website at revenue.state.il.us and obtain Form IL-1040 and the corresponding instructions.
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Refer to your federal income tax return and obtain your adjusted gross income. Enter this amount on the first line of the "Income" section of Form IL-1040.
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Enter any federal tax-exempt interest and any other additions to your income in the spaces provided.
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Combine the income amounts to determine your total income and enter the amount in the line labeled "Total Income."
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Enter any subtractions to your income in the "Base Income" section of Form IL-1040, which can include Social Security benefits and Illinois income tax overpayments.
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Combine your subtractions and enter the amount in the corresponding line.
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Reduce your total income by your subtractions to determine your base income. Enter this amount in the line labeled "Base Income."
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Enter the number of exemptions you claimed on your federal income tax return in the space provided.
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Multiply each exemption by $2,000 and enter the total amount in the "Exemptions Allowance" line of the form.
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Subtract your exemptions allowance from your base income to determine your net income. Your net income is your taxable income because the Illinois Department of Revenue uses this amount to determine your tax.
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