529 Plans

• Saving for higher education for children can be another way for individuals to receive a tax deduction in Illinois. Section 529 plans are educational savings plans administered by states to help families save money for their children's future college expenses. In Illinois, these contributions are tax deductible. Individuals can deduct up to $10,000 in contributions made to a beneficiary's 529 plan. Married couples can deduct up to $20,000 in contributions. Employers can also take a 25-percent tax credit of up to $500 per employee for matching contributions.
  
  

Standard Deduction

• Taxpayers in Illinois are also entitled to a standard deduction of $2,000 per person. This standard amount is deducted from the base tax rate to reduce an individual's tax liability. This amount increases by $1,000 if the taxpayer is over 65 years of age. Individuals who have become legally blind by the end of the tax year are entitled to an additional $1,000 deduction. Dependents whose base income exceeds the basic amount are not entitled to a deduction. Corporations have a standard deduction of zero in Illinois.
  
  

Hotel Taxes

• Hotel owners pay the Illinois Department of Revenue (IDOR) taxes for being in the business of renting rooms to the general public for periods of less then 30 days at a time. Taxes can be imposed on a state level and by the city of Chicago. Taxes can be deducted on form RHM-1 for receipts from permanent residents, foreign diplomats and student housing not applicable to hotels. In addition, receipts from the sale of food and beverages and bad debts can be deductible in Illinois.
  
  

Health Insurance

• Self-employed individuals can also benefit from deducting health insurance premiums from their Illinois state income tax returns. Self-employed individuals do not qualify for group plans and must, therefore, purchase separate individual policies. These policies can be quite costly, especially if you need to insure other dependents. Illinois allows a percentage of these health insurance premiums to be deducted from the state income tax if the taxpayer chooses to itemize on his tax return. These deductions vary from 70 to 90 percent of the premiums depending on the tax year.