Cost of Living in Illinois
Illinois's cost of living is shaped by genuine statewide housing affordability and a moderate flat income tax, set against the nation's highest-tied property tax burden and Chicago's real, genuinely high combined sales tax -- with real, substantial regional variation this record does not flatten into one statewide number.
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Learn moreA moderate income tax paired with the nation's highest-tied property tax
Illinois's flat 4.95% state income tax is a real, moderate rate. What actually drives Illinois's cost-of-living reputation is property tax: a statewide average effective rate of 1.88% (Tax Foundation, 2026), tied with New Jersey for the highest in the nation, with Cook County running meaningfully higher still (commonly 2.0%-2.7%). Retirees get real relief here Illinois's other cost drivers don't offset for working-age households -- see the income-taxes and retiring topics.
Statewide housing affordability is real, but masks a substantial regional spread
Illinois's statewide housing costs run genuinely below the national figure on every measure reviewed this pass -- Zillow's statewide average home value ($294,136) runs roughly 21% below the national figure; Illinois REALTORS' statewide median sale price ($345,000) runs roughly 16% below the national median. But this statewide average papers over a real spread: Chicago's North Shore and western 'Tri-Cities' suburbs run well above it, while much of downstate runs well below.
Sales tax is a real, everyday cost that varies sharply by municipality
Illinois's 6.25% state base sales tax rate climbs with local add-ons across 567 taxing jurisdictions to a statewide average combined rate around 8.86% and a real Chicago high of 10.25% -- a genuine, everyday cost difference depending on where you live and shop, not a single statewide figure.
Homeowners insurance is trending up, tied to a real, current severe-weather pattern
Illinois's homeowners-insurance costs carry a real, disclosed spread across sources ($2,402-$3,108/year) and are rising faster than the national average -- 2026 industry reporting projects roughly a 5% increase, pushing the statewide average toward roughly $3,559/year, tied directly to Illinois's record 2026 tornado season and its August derecho.
Key takeaways
- Illinois's flat 4.95% income tax is moderate; the statewide average effective property tax rate (1.88%) ties for the highest in the nation and is the bigger driver of Illinois's cost-of-living reputation.
- Statewide housing runs roughly 16%-21% below national figures, but Chicago's North Shore and Tri-Cities suburbs run well above that average while much of downstate runs well below it.
- Sales tax ranges from the 6.25% state floor to Chicago's real 10.25% combined rate -- confirm your specific municipality directly.
- Homeowners-insurance costs are rising faster than the national average, tied to Illinois's record 2026 tornado season and August derecho.
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