Lake County Tax Deductions are the Highest in the State

No one likes paying taxes, but they are inevitable for the important things we want as a society.  The Illinois tax code means that all residents pay the same percentage of their income for state taxes.  Federal taxes vary greatly and many municipalities throught Illinois levy their own local taxes.  These can include different items such as sales or luxury taxes and hit many different levels.

Some places benefit more from state and local tax deductions.  The Tax Foundation explains that people can get itemized tax deductions for state and local income taxes, sales taxes and real estate taxes. They looked at every county in the country and the way their residents benefit from these tax deductions:

The measurement used here is mean deduction amount taken per return: in other words, the total of all of the deductions for state and local taxes, divided by number of returns filed.

New York county wins the highest average state and local tax deductions in the country with an average of $20,621 deductions.  While Illinois isn’t in the top of the country (most residing in New York, New Jersey or California), Lake county leads the state in the highest amount of tax deductions with $7,816.

The Tax Foundation reports that there is a stark difference between places in which residents benefit greatly from tax deductions and places where they don’t.  This can be explained by the fact that income levels have an impact on how many deductions someone can take.

There are two reasons for this variation. The first is that higher-income taxpayers tend to take larger deductions, and this effect is very strong. People with very high incomes tend to have very high levels of sub-federal taxes paid. This effect is then further magnified by the fact that not everyone takes itemized deductions. Lower-income taxpayers tend to opt for the standard deduction instead.

The second, though, is that state and local tax regimes themselves differ substantially. The places that benefit most from this federal deduction tend to have high state and local taxes overall. 

When people have higher incomes and pay more in taxes, their deductions are worth more. Also, when tax burdens are higher in particular states/cities in general, deductions tend to be higher in absolute numbers, even if they are similar to other places in terms of percentage of total taxes paid.

Illinois Counties With The Highest Deductions

1. Lake–$7,816
2. DuPage–$6,410
3. Kendall–$5,572
4. McHenry–$5,520
5. Will–$5,170
6. Kane–$5,065
7. Cook–$4,038
8. Monroe–$4,002
9. McLean–$3,622
10. Grundy–$3,561