Key takeaway: Illinois doesn’t tax Social Security, pensions or IRA and 401(k) withdrawals, Cook County seniors get an $8,000 senior exemption on their home’s assessed value, and seniors enrolled in Benefit Access ride CTA, Metra and Pace for free.
Chicago is a strong place to retire if you know the breaks available: no state tax on retirement income, several property tax programs for older homeowners, free or reduced transit and plenty of free museums, parks and lakefront. Here are the numbers.
Taxes on retirement income
Illinois lets residents subtract the federally taxed part of Social Security, qualified pensions, 401(k) plans and IRAs from their state income (Illinois Department of Revenue, Publication 120). Other income is taxed at the flat 4.95% rate.
Property tax help for seniors
| Program | Who qualifies | What you get |
|---|---|---|
| Senior Exemption | Homeowners 65 or older | $8,000 off the equalized assessed value |
| Senior Freeze | Homeowners 65 or older with household income of $65,000 or less (2024 income) | Holds the home’s assessed value steady; the tax bill itself can still change |
| Senior Freeze, new limits | Same, under a law signed in December 2025 | Income limit rises to $75,000 for tax year 2026, then $77,000 and $79,000 |
| Senior Property Tax Deferral | 65 or older, household income $75,000 or less, owned 3+ years | Defer up to $7,500 a year at 3% simple interest |
Source: Cook County Assessor, Cook County Treasurer and the Illinois Senate Democratic Caucus, as linked. See our property tax guide for how exemptions show up on your bill.
Transit
Seniors enrolled in the state’s Benefit Access program ride CTA, Metra and Pace fixed routes for free, and everyone 65 or older can get a Reduced Fare permit (NITA). Benefit Access income limits are $33,562 for one person and $44,533 for two (Illinois Department on Aging).
Other costs and discounts
| Item | 2026 cost |
|---|---|
| Medicare Part B premium | $202.90 a month, $283 deductible |
| Chicago City Sticker, seniors 65+ | $37 a year |
| Chicago dog registration, seniors (spayed or neutered) | $2.50 a year |
Source: CMS; City Clerk City Sticker prices; City Clerk dog registration.
Where to live
Rent and home prices vary widely by neighborhood. Condos in many neighborhoods sold for medians under $250,000 in 2024, from Edgewater and Rogers Park on the lake to West Ridge and Irving Park. Compare them in our neighborhood cost comparison, and see our health insurance guide if you’re retiring before Medicare age.
Sources
- Illinois Department of Revenue: retirement income
- Cook County Assessor: Senior Exemption
- Cook County Assessor: Senior Freeze
- Illinois Senate Democrats: Senior Freeze expansion
- Cook County Treasurer: Senior Tax Deferral
- NITA: free and reduced fares
- Illinois Department on Aging: Benefit Access
- CMS: 2026 Medicare Part B
- City Clerk: City Sticker prices
- City Clerk: dog registration