Side-by-side tax comparison between Illinois (4.95% top rate, flat) and Indiana (2.95% top rate, flat). See which state lets you keep more at every salary level, and how cost of living changes the picture.
Illinois uses a flat income tax (4.95% flat) while Indiana has a flat system (2.95% flat + local). On a $100K salary, Illinois takes $4,950 in state and local taxes compared to Indiana’s $2,950 \u2014 a difference of $2,000.
Both states use flat brackets, but Illinois’s top rate of 4.95% is higher than Indiana’s 2.95%.
Indiana also has local income taxes (estimated at $0/year on $100K), which Illinois does not.
Indiana wins at 10 out of 10 salary levels tested. The advantage exists but is modest across the income spectrum.
| Salary | Illinois | Indiana | Difference | Winner |
|---|---|---|---|---|
| $40K | $32,340 | $33,140 | +$800 | Indiana |
| $50K | $39,880 | $40,880 | +$1,000 | Indiana |
| $60K | $47,420 | $48,620 | +$1,200 | Indiana |
| $75K | $57,825 | $59,325 | +$1,500 | Indiana |
| $100K | $74,175 | $76,175 | +$2,000 | Indiana |
| $120K | $87,255 | $89,655 | +$2,400 | Indiana |
| $150K | $106,326 | $109,326 | +$3,000 | Indiana |
| $200K | $138,987 | $142,987 | +$4,000 | Indiana |
| $250K | $170,889 | $175,889 | +$5,000 | Indiana |
| $300K | $200,479 | $206,479 | +$6,000 | Indiana |
Take-home pay only tells part of the story. Illinois has a cost of living index of 93 while Indiana is at 90 (national average = 100).
With similar costs of living (93 vs 90), the tax difference is the primary factor. What you see in raw take-home pay is essentially what you get in purchasing power: $79,758 in Illinois vs $84,639 in Indiana.
For a single earner at $100K filing jointly, take-home becomes $79,760 in Illinois and $81,760 in Indiana \u2014 a difference of $2,000. The gap remains similar regardless of filing status.
On paper, moving from Illinois to Indiana would save $2,000/year on a $100K salary, or $10,000 over 5 years. But relocation involves real costs: moving expenses, potentially buying/selling a home, changing jobs, and adjusting to a new community.
At $2,000/year, the tax difference alone likely isn’t worth relocating for. Other factors — job market, lifestyle, family — should drive the decision. The tax savings are a nice bonus if you’re already considering the move for other reasons.