We get that people in Illinois don’t always have the highest opinion of those of us here in Indiana. You may even think the “cost” of living in Indiana is not living in Chicago.
Yet a growing number of people are opting to buy a home in Northwest Indiana while commuting to their job in Chicago. They must know something, right?
Those of us who live here know that it makes good financial sense to live in Indiana, not to mention it can be good for your soul. Compare life in Indiana vs. Illinois further with Steiner Homes.
Indiana Has a Lower Average Cost of Living than Illinois
Check any online cost of living calculator and you’ll find that it’s simply cheaper to live in Indiana. In 2018, the Missouri Economic Research and Information Center ranked Indiana the state with the third lowest cost of living in the Midwest and the ninth lowest cost of living in the nation.
Simply put, living in Indiana means that you’re spending less on housing, utilities, groceries, and transportation than you would pretty much anywhere in Illinois.
Indiana Gives You More for Your Money
That lower cost of living can come with some unexpected benefits. Consider housing costs. A home valued at $250,000 in Merrillville will typically be much larger than an equivalently priced home in Chicago.
U.S. News ranked Indiana #3 in Housing Affordability and #2 in Overall Affordability. Illinois was ranked #22 overall.
In addition, you get access to great schools. Indiana’s Four Star School program ranks the state’s schools for excellence in academics and accountability. Northwest Indiana boasts 30 Four Star schools, and there are over 230 Four Star schools statewide.
Indiana Has Lower Taxes Than Illinois
Now we know we have your attention. It’s true: In every tax category, you’ll pay less in Indiana.
Indiana vs. Illinois: Property Taxes
Let’s start with buying a home. Not only will you get more home for your money than you would in Illinois, you’ll pay a lot less in property taxes. Average property tax on a $194,000 home in Illinois is $4,476, while the tax on a home of the same value in, say, Valparaiso is $1,679, a savings of nearly $3,000.
In fact, Illinois has one of the highest property tax rates in the whole country.
Indiana vs. Illinois: Sales Taxes
Purchases of food, clothing, movie tickets, cars, and so on will cost you more in sales tax in Illinois than in Indiana.
While it’s true that Illinois’s state sales tax of 6.25% is lower than Indiana’s state sales tax of 7%, it’s also true that many cities and counties assess their own sales taxes. Commuters from Naperville, for instance, pay a minimum of 7.75% in combined sales taxes. Between Cook County and city taxes, you pay 10.25% combined sales tax in the city of Chicago.
Indiana vs. Illinois: Income Taxes
What about your take-home pay? Illinois relies more than Indiana on individual and business income taxes. Illinois taxes individual income at a rate of 4.95% and business income at 7%.
Compare that to Indiana, which has an individual rate of 3.23% and a business rate of 5.75%.
Now, it is true that Indiana counties assess income tax, too. In Lake County, Indiana, which borders Cook County, Illinois, the county tax rate of 1.5% will take you up close to the state tax but still not equal it.
Will I have to pay taxes in Illinois if I live in Indiana?
While we’re on the subject of income tax, let’s look at a very relevant question: In which state do I have to file income tax returns?
Commuting to work in Chicago may seem like an easy financial choice, but taxes always complicate things. Yes, you will have to pay taxes on any income you earn in Illinois. In fact, you’ll need to fill out tax returns for both states. That’s the bad news.
The good news is that you can get credit for your Illinois income tax on your Indiana income tax. In other words, you won’t be taxed twice.
Are Indiana and Illinois Reciprocal States?
Reciprocal states have agreements whereby residents of one who earn money in another can simply file income tax returns with their state of residence.
Illinois has reciprocity with Iowa, Kentucky, Michigan and Wisconsin. Indiana has reciprocity with Kentucky, Michigan, Ohio, Pennsylvania and Wisconsin. As you can see, they do not have reciprocity with each other. Thus, you have to file returns in both states.
Fuel and Alcohol Taxes
Two more ways you’ll pay less in Indiana are at the pump and at the liquor store.
Indiana’s state gas tax is a little higher than Illinois’s, but in Illinois, the city and county often add additional taxes so that the combined is higher than ours—Chicago and Cook County being one of the most expensive.
Indiana tax on beer is 50% less than in Illinois. The tax on wine is 66% less and the tax on liquor is nearly 70% less.
Save on In-State Tuition at Indiana’s Great Universities
People who move to Indiana can save big on in-state tuition at any of our excellent, nationally renowned universities.
Imagine sending your child to a school like:
- Indiana University
- Notre Dame
It’s Easy to Get to Chicago from Indiana
Worried about living too far from the Windy City? We’ve got good news: Being a state away isn’t the same as being far away. Many fine Indiana cities lie within commuting range, and many more are near enough for day trips or quick overnights.
Assuming you drive to work, here’s how long you’d commute:
- Munster to Chicago – 35 minutes
- Gary to Chicago – 40 minutes
- Merrillville to Chicago –`45 minutes
- Valparaiso to Chicago – 55 minutes
- Indianapolis to Chicago – 3 hours
Prefer to save on gas? Commuters can take the South Shore Line to train to their Chicago office. The South Shore Line conveniently stops in Hammond, East Chicago, Gary, Michigan City, and South Bend.
Living in Indiana is Good for Your Soul
Financial advantages aside, Indiana just feels good to live in. At least part of the stereotype is true: We have a slower pace of life here, and we like it that way. We have a lot of space where, yes, you’ll find a lot of corn, but a person feels like they can stretch out and breathe a little, too.
The first thing people notice when they move here is how friendly everyone is. People say there’s a small-town vibe everywhere you go, here, even in the bigger cities. Oh, you may feel a little bit of an outsider for a while, too, but over time you’ll be welcomed as part of the town.
Have kids? Take them to the Children’s Museum of Indianapolis, rated first in the nation. Need some beach time? We have over 25 miles of shore on Lake Michigan. Hiking? We have both a national park and a state park.
Like sports? You can root for the Indiana Pacers or the Indianapolis Colts. We’re a big college sports state, too. Hoosiers fans never forget Indiana University’s basketball legacy—what with Bob Knight and the team’s undefeated season. Oh, and perhaps you’ve heard of the Indianapolis 500?
We invite you to come on out and have a look yourself. Contact us today and we’ll help you lower your cost of living and increase your peace of mind with a little piece of Indiana all your own. You can start by checking out our custom floor plans or by learning more about the many subdivisions in Northwest Indiana.