How Illinois Income Tax Hike Will Affect Chicago Residents
As if it isn't hard enough to afford your federal income taxes come April, now Chicago residents have to worry about a state income tax hike as well.
Illinois - like California and a handful of other states - is facing a major budget shortfall. To cover it, lawmakers agreed to raise the personal income tax from 3 percent to 5 percent, at least temporarily. On the one hand, it's probably long overdue - the state of Illinois has not raised income taxes since 1989. On the other hand, it's not the best timing for thousands of Chicago residents currently struggling with unmanageable debts.
If you paid $1,000 in state income taxes last year, that means you'll have to pony up $1,660 this year - no small change if you're already cutting your budget. But look on the bright side. Some of that increase could be offset if you qualify for the recent federal payroll tax cut. Even if your bigger tax bill presents a hardship, you've still got four months to do something about it.
If you truly can't afford the tax hike, you've got several options (hint: not paying isn't one of them). You can borrow money from a friend or relative (only if you are certain you can pay them back, of course), put the bill on your lowest-interest credit card or request an extension. The problem with these choices, however, is that they only put off the inevitable - you are still going to have to pay the amount one way or the other, and putting it off will only make doing so more expensive.
The cheapest and most effective way to make paying your taxes affordable is to cut out other costs in your life. I know that many of us are already on a tight budget, and there are some things we can't live without--like gas for our commute, food for our family, paying the mortgage or rent, etc. But here's what we can live without: debt. If you've been waiting for an excuse to finally get your debt under control, this is it. Even if your debts are too large to pay off alone, filing for bankruptcy can provide the support - and legal protection - you need. Best of all, it doesn't cost a dime to find out if bankruptcy is right for you. Just sign up for a free one-on-one debt analysis with a Chicago bankruptcy attorney. We'll do the work - you'll reap the benefits.