Due to Illinois massive $15 billion dollar deficit the state legislature (waiting Govs. signature) has decided to increase the state income tax from 3 to 5 percent. This may impact the Illinois Quad Cities real estate market. Illinois property owners typically pay higher property taxes than Iowa homeowners but this was some what offset by the higher income taxes in Iowa. That gap will shrink with the new tax law. Here is a table taken from http://www.tax-rates.org/. showing what IL residents currently pay, what they will pay and what Iowa pays. Go to the above website to look at your states income tax rate.
Income IL Taxes now IL Taxes increased Iowa Taxes now
$15,000 $450 $750 $900
$45,000 $1,350 $2,250 $3,600
$100,000 $3,000 $5,000 $9,000
$200,000 $6,000 $10,000 $18,000.
You can see that as far as income taxes go it would still be more favorable to live in Illinois. Yes, property taxes are higher in IL but at least they are tax deductible on your income tax return. If you are thinking about moving and are concerned about the potential tax consequences than I recommend you speak with an accountant as there are other factors to consider such as how your retirement might be taxed.
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