Updated October 4, 2026. Quick answer: Yes. Illinois taxes capital gains at its flat rate: “The Illinois income tax rate is 4.95 percent (.0495)”. The gain comes in from “Capital gain or loss (federal Form 1040 or 1040-SR, Line 7a)” and the instructions print no separate state rate for gains.
Selling your home? How the state taxes the profit, from its own tax documents: Does Illinois tax the profit from selling your home?.
The same question for dividends and interest: does Illinois tax dividends and interest.
How Illinois treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Taxed as ordinary income at the flat individual rate; no separate rate for gains |
| Rate | 4.95 percent |
| Where the gain enters | Federal Form 1040, Line 7a, carried to the Illinois return |
A $50,000 long-term gain
A $50,000 long-term gain is taxed at 4.95 percent, computed as $50,000 x 4.95% = $2,475 of Illinois tax on the gain, before the personal exemption allowance or any other income.
What changes in 2026
The latest document read prints no 2026 change to the way gains are taxed.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether Illinois taxes pensions, how Illinois taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- 2025 Form IL-1040 Instructions: https://tax.illinois.gov/content/dam/soi/en/web/tax/forms/incometax/documents/currentyear/individual/il-1040-instr.pdf
- Income Tax Rates: https://tax.illinois.gov/research/taxrates/income.html
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.