Illinois residents, businesses hit by tax hikes

On Wednesday, Illinois residents and businesses received the unwelcome news of a significant tax hike as state government officials try to balance Illinois' deficit, the Chicago Tribune reports. For most residents, the new state tax code will nullify any benefit that would have been gained by the federal payroll tax deduction.

Illinois citizens will pay 2 percent more in income taxes - up to 5 percent - and that could have an affect on small business owners as well. The corporate tax rate will climb from 4.8 percent to 7 percent.

There's nothing left of the income as it is, with the mortgage and the car payments and the kids,” Peoria resident Amber Gavin told the Peoria Journal Star. "We've already cut back on everything we can cut back on."

According to the Tribune, individuals who previously paid $2,000 in income taxes may now face an additional $1,000 deduction from their paychecks. The new tax could have further damaging effects because the federal payroll tax break will only exist for 2011. Beyond that, Illinois residents may feel greater pain.

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