What Are the Tax Changes for 2026 in Illinois? A Guide for Cook County Residents

If you live or run a business in Cook County, several Illinois tax changes in 2026 may affect your household budget, business operations, or investment decisions. Some updates apply statewide, while others may feel more noticeable in areas like Chicago and surrounding suburbs.

Here is what you need to know.

1. State Income Tax Rules Remain the Same, But Some Details Changed

Illinois still has a flat individual income tax rate of 4.95 percent. That rate did not change for 2026.

However, some technical rules affecting businesses did change, especially for:

• Partnerships

• S corporations

• Multi-state businesses

If you own a business in Cook County that operates outside Illinois, new income sourcing rules may affect how much of your income is taxed here. Business owners should review their structure and talk with a tax professional to avoid surprises.

For employees and wage earners, withholding tables and state forms have been updated for 2026. Most people will not notice a major difference, but it is always smart to check your first few pay stubs of the year.

2. Grocery Tax Eliminated at the State Level

One of the most talked about changes is the elimination of the 1 percent Illinois state grocery tax in 2026.

However, this does not automatically mean groceries are tax-free everywhere in Cook County. Local governments have the option to keep a local grocery tax in place. Many municipalities have chosen to do so.

That means your grocery bill may still include local tax, depending on where you shop. Chicago residents, in particular, should watch for updates from the city regarding local grocery taxes.

3. Remote Seller Sales Tax Changes

If you operate an online business in Cook County, the rules for collecting Illinois sales tax have been simplified.

Beginning in 2026, remote sellers must collect Illinois sales tax if they have at least $100,000 in sales to Illinois customers over a 12 month period. The old 200 transaction rule no longer applies.

This change makes compliance easier to understand, but more online sellers may now meet the threshold. If you sell products online, review your annual Illinois sales totals carefully.

4. Tobacco and Nicotine Taxes Increased

Illinois increased taxes on tobacco products and expanded taxation to certain nicotine products, including nicotine pouches.

Cook County already has some of the highest tobacco-related taxes in the country. These additional increases may further raise retail prices across Chicago and nearby suburbs.

5. Gas Tax Adjustments

Gasoline and diesel taxes saw modest increases heading into 2026. For Cook County commuters who drive daily, especially into downtown Chicago, fuel costs may continue to feel elevated.

These increases are tied to statewide transportation funding.

6. Tax Credits and Income Limits

Certain Illinois tax credits remain available in 2026, including:

• Education expense credits

• Property tax credits

• Earned Income Credit

However, some credits phase out at higher income levels. Higher-earning households in Cook County should review eligibility before assuming a credit still applies.

7. Proposed Millionaire Surtax

Lawmakers are discussing a potential surtax on income above $1,000,000. If approved and placed on the ballot, voters would decide whether to add a 3 percent surcharge on income over that threshold.

This would mainly affect high-income earners, business owners, and investors in areas such as Chicago’s North Side, downtown, and certain suburbs.

It is still a proposal, not current law.

What Should Cook County Residents Do?

Here are a few practical steps for 2026:

• Review your first paycheck of the year for correct withholding

• Confirm whether your municipality kept a local grocery tax

• Track online sales carefully if you run a business

• Check your eligibility for Illinois tax credits

• Consult a tax advisor if your income is complex or crosses state lines

Illinois tax laws can change quickly, especially in high-revenue areas like Cook County. Staying informed early in the year can help you avoid unexpected tax bills and plan with confidence.