Illinois is one of the simpler income-tax states for freelancers: a single flat rate, no city income tax in Chicago, and estimated payments on the same dates as the IRS. Here is what an Illinois freelancer owes.
What you pay on freelance profit
| Tax | Rate |
|---|---|
| Federal self-employment tax | 15.3% on 92.35% of profit (12.4% part capped at $184,500 for 2026) |
| Federal income tax | 10%–37% |
| Illinois income tax | Flat 4.95% of Illinois net income |
| City income tax | None — Chicago and other Illinois cities don’t tax income |
The flat 4.95%
Illinois has taxed individual income at a flat 4.95% since July 2017. Illinois starts from your federal adjusted gross income, so business expenses on Schedule C and the deduction for half of your self-employment tax reduce your Illinois income too. The federal standard deduction and the federal QBI deduction do not carry over; instead Illinois gives a small personal exemption.
Estimated payments
If you expect to owe more than $1,000 of Illinois tax after withholding and credits, make estimated payments with Form IL-1040-ES. The due dates match the IRS: April 15, June 15 and September 15, 2026, and January 15, 2027. You don’t need to make Illinois estimated payments if you weren’t required to file an Illinois return the year before.
Size your federal payments with the quarterly estimated tax calculator, then add one quarter of your expected Illinois tax to each payment date.
Sole proprietor vs LLC
- A sole proprietor or single-member LLC taxed as a sole proprietor simply reports business income on their personal Illinois return.
- Businesses taxed as partnerships or S corporations also owe Illinois’s Personal Property Replacement Income Tax (1.5% of net income for those entities). Factor that in if you’re weighing an S corp election.
- Illinois LLCs file an annual report with the Secretary of State each year to stay in good standing.
How much to set aside in Illinois
In the tax set-aside calculator, enter 4.95 in the state field. Because Illinois tax applies from a low starting point with only a small exemption, the flat rate is a close approximation of your real Illinois cost on each extra dollar.
Sales tax
Illinois generally taxes sales of goods, not services. If you only sell services, you usually don’t need to collect sales tax; if you sell physical products, register with the Illinois Department of Revenue.