Updated 10:50 a.m. on Friday, March 8, 2019.
For the first time, Gov. JB Pritzker is telling Illinois residents what he thinks they should pay in personal income taxes. The Democratic billionaire heir to the Hyatt Hotels fortune campaigned heavily on changing Illinois’ constitution from a flat income tax to a graduated one, in which wealthy people would pay a higher tax rate than poor people. Despite making the tax change the backbone of his campaign for election, Pritzker repeatedly refused to say what he thought Illinois residents should pay to the state under a graduated income tax structure - until today.
Currently, Illinois has a constitutionally mandated flat income tax rate. That rate is 4.95 percent.
Under Pritzker’s newly released proposal, there are six brackets. Within those brackets, the rates are marginal, meaning most people would see their income taxed at multiple rates. For example, if your income is $50,000, your first $10,000 would be taxed at 4.75 percent. Starting at $10,001, the rest would be taxed at 4.9 percent.
Here are the marginal rates set for single and joint filers under Pritzker’s plan:
7.95% - $1,000,000 and up
7.85% - $500,001 - $1,000,000
7.75% - $250,001 - $500,000
4.95% - $100,001 - $250,000
4.9% - $10,001 - $100,000
4.75% - $0 - $10,000
Notably, Pritzker’s proposal calls for taxing someone’s entire income over $1,000,000 at 7.95 percent. He estimates these new rates in total would raise an additional $3.4 billion for the state.
He is also calling for an increase in the corporate income tax rate, from the current 7 percent to 7.95 percent.
Illinois lawmakers and voters would have to approve changing the constitution to a graduated income tax before these rates could be enacted. The soonest such a change could be approved is in the November 2020 election.
The plan drew an immediate rebuke from Illinois Republican Party Chairman Tim Schneider.
“More tax hikes will not solve Illinois’ fiscal problems. Pritzker’s proposed $3.4 billion tax increase will lead to even more out-migration of Illinois families, businesses, and jobs,” Schneider said in a statement.
Tony Arnold covers Illinois state politics for WBEZ. Follow him @tonyjarnold.