Every year, tens of thousands of Illinois residents pack up and leave. According to U.S. Census Bureau estimates released in January 2026, Illinois lost more than 40,000 residents to other states between July 2024 and June 2025. That makes Illinois the third-highest state for domestic outmigration, behind only California and New York. When pollsters ask those who left why they moved, the answer is consistent: high taxes.
Tennessee has become one of the most popular destinations for Illinois expats. Atlas Van Lines listed Tennessee among the top inbound states for 2025, and United Van Lines data shows retirement, cost of living, and lifestyle as the top three reasons people are making the move south. If you are comparing these two states and weighing your options, here is a detailed, data-driven breakdown of how Illinois and Tennessee compare on the things that matter most.
How Do Income Taxes Compare Between Illinois and Tennessee?
Illinois levies a flat state income tax of 4.95% on all earned income, regardless of how much you make. Tennessee has no state income tax on wages, salary, or any other form of personal income. The Hall Tax on interest and dividends, which Tennessee once imposed, was fully phased out in 2021.
For a household earning $200,000 per year, the difference is straightforward: you would owe roughly $9,900 in state income tax in Illinois and $0 in Tennessee. At $300,000, the gap widens to nearly $14,850 in annual savings. For retirees and high earners alike, this is often the single largest line item driving the relocation decision.
How Do Property Taxes Compare?
Property tax is where the gap between Illinois and Tennessee becomes especially dramatic, and it is one of the most underestimated factors for homeowners comparing these two states.
Illinois has one of the highest effective property tax rates in the nation. The Tax Foundation reports a statewide average of approximately 1.83%. In the Chicago suburbs, it climbs much higher. Lake County’s effective rate exceeds 2.5%, and DeKalb and Peoria counties top 2.2%. Tennessee’s statewide effective property tax rate is roughly 0.56%. In Loudon County, home to communities like WindRiver on Tellico Lake, the rate drops to approximately 0.45%.
Here is what that looks like in real dollars on homes at different price points:
| Home Value | Illinois (1.83% avg.) | Loudon County, TN (0.45%) | Annual Savings in TN |
| $500,000 | $9,150 | $2,250 | $6,900 |
| $750,000 | $13,725 | $3,375 | $10,350 |
| $1,000,000 | $18,300 | $4,500 | $13,800 |
Over a 10-year period, a homeowner with a $750,000 home would save more than $100,000 in property taxes alone by living in Loudon County instead of the average Illinois county. In Chicago’s northern suburbs, the savings would be even larger.
What About Sales Tax?
Tennessee does have a higher average combined sales tax rate than Illinois. Tennessee’s combined state and local rate averages approximately 9.55%, compared to Illinois at roughly 8.85%. This is the one category where Tennessee comes in slightly higher.
However, for most households, especially those spending the majority of their income on housing, healthcare, and non-taxable services rather than retail goods, the savings from zero income tax and dramatically lower property taxes far outweigh the marginal difference in sales tax.
Is Tennessee Better Than Illinois for Retirement?
For retirees, the comparison is particularly compelling, and it goes beyond the headline of “no income tax.”
Social Security: Neither state currently taxes Social Security benefits.
Pensions, 401(k), and IRA Distributions: Tennessee does not tax any form of retirement income because it has no income tax at all. Illinois also currently exempts retirement income from its 4.95% flat tax. However, there is an important distinction that most comparison articles overlook.
The Legislative Risk in Illinois: In February 2025, Illinois state legislators introduced bills to eliminate the flat tax protection enshrined in the Illinois Constitution and move to a graduated (progressive) income tax. Policy analysts have noted that every state with a graduated income tax also taxes retirement income. If Illinois removes its flat tax protection, the door opens to taxing pensions, 401(k) distributions, and IRA withdrawals. Illinois voters rejected a similar amendment in 2020, but the proposals keep returning.
Tennessee’s protection is structural, not political. The state simply does not have a mechanism to tax personal income. There is no constitutional amendment debate, no legislative risk, and no uncertainty. For retirees making long-term financial plans, that stability matters.
Estate Tax: Illinois imposes an estate tax on estates exceeding $4 million, with rates up to 16%. Tennessee has no estate tax and no inheritance tax.
What Does a $500,000 Home Look Like in Illinois vs. East Tennessee?
In the northern suburbs of Chicago, $500,000 typically buys a 3-bedroom home on a modest lot in a subdivision built in the 1980s or 1990s, often with dated finishes and annual property taxes approaching $10,000 or more.
In East Tennessee, and specifically in communities around Tellico Lake, $500,000 can buy a newer construction home with 3 to 4 bedrooms, a mountain or lake view, and access to community amenities like golf, a marina, fitness facilities, and hiking trails. Property taxes on that same home would be roughly $2,250 per year. The purchasing power difference is substantial, and it is one of the reasons the Knoxville metro and surrounding areas continue to attract retirees and second-home buyers from the Midwest.
How Does Quality of Life Compare?
Both states offer genuine quality-of-life strengths. Illinois has Chicago, one of the great American cities, with world-class museums, restaurants, professional sports, and cultural institutions. For those who thrive on urban energy, it is hard to beat.
But for those who are entering retirement or simply ready for a different pace, East Tennessee offers something that Chicago’s suburbs cannot match.
Outdoor Recreation
East Tennessee sits at the doorstep of Great Smoky Mountains National Park, the most visited national park in the country. Residents enjoy year-round hiking, fishing, kayaking, and boating on Tellico Lake, which offers 16,000 acres of clear, TVA-managed water and 373 miles of shoreline. Communities along the lake provide direct access to the water from their own marinas and docks.
Golf
Tennessee’s mild climate allows for nearly year-round play. WindRiver’s championship golf course, designed by legendary architect Bob Cupp and certified as an Audubon Signature Sanctuary, features a par-72 layout with six sets of tees and panoramic views of Tellico Lake and the Smoky Mountains. Illinois golf seasons, by contrast, are typically limited to six or seven months.
Climate
East Tennessee offers four mild seasons. Winters are short and moderate, with average January highs in the upper 40s and minimal snowfall. Summers are warm but manageable, especially near the lake. By comparison, Chicago averages highs around 32 degrees in January, with significant snowfall and extended periods below freezing.
Community and Culture
Knoxville, just 30 minutes from Lenoir City, is home to the University of Tennessee, a growing food and arts scene, and a walkable downtown centered around Market Square. For those who value a planned community setting with built-in social connections, gated lakefront and golf communities in the area offer dining, events, fitness, and organized activities alongside the privacy and security of a residential enclave.
How Is Healthcare Access in East Tennessee?
Healthcare access is a critical factor for anyone considering a move, especially retirees. East Tennessee is served by several major hospital systems, including the University of Tennessee Medical Center (a Level I Trauma Center in Knoxville), Covenant Health, and Fort Loudoun Medical Center in Lenoir City, which provides 24-hour emergency care just minutes from lakefront communities.
McGhee Tyson Airport in Knoxville is approximately 20 miles from Lenoir City and offers nonstop flights to major hubs including Atlanta, Charlotte, Chicago, Dallas, Denver, Houston, and Washington, D.C. For those maintaining connections to family, business, or medical specialists in other cities, the airport provides practical, convenient access.
Illinois vs. Tennessee: Side-by-Side Summary
| Category | Illinois | Tennessee (East TN) |
| State Income Tax | 4.95% flat rate | None |
| Property Tax Rate | ~1.83% (up to 2.5% in suburbs) | ~0.45% (Loudon County) |
| Property Tax on $750K Home | ~$13,725 / year | ~$3,375 / year |
| Avg. Combined Sales Tax | ~8.85% | ~9.55% |
| Social Security Tax | Not currently taxed | Not taxed (no income tax) |
| Pension / 401(k) / IRA Tax | Not currently taxed (legislative risk) | Not taxed (no income tax) |
| Estate Tax | Yes (estates over $4M, up to 16%) | None |
| Tax Burden Rank | 10th highest (WalletHub) | 49th (near lowest) |
| Winter Climate | Cold (Jan avg. high ~32°F) | Mild (Jan avg. high ~48°F) |
| Nearest Mountains | N/A | Great Smoky Mtns (~60 mi.) |
| Lake Recreation | Lake Michigan (urban) | Tellico Lake (16,000 acres) |
| Nearest Airport | O’Hare / Midway | McGhee Tyson (~20 mi.) |
Exploring WindRiver in East Tennessee
For Illinois residents considering the move to Tennessee, WindRiver is a gated lakefront and golf community in Lenoir City on the shores of Tellico Lake. The community includes a championship golf course, a full-service marina with covered slips from 30 to 90 feet, Citico’s lakefront restaurant, a pool and sports complex with tennis, pickleball, and basketball courts, over 30 miles of hiking and walking trails accessible directly from the community, and a new Clubhouse Village currently under construction.
Homes and homesites are available across several neighborhoods, including lakefront, golffront, lakeview, and interior options. Custom homes are built by a curated list of Premier Builders.
The best way to see whether WindRiver fits your lifestyle is to schedule a Discovery Tour. It is a personal, guided visit that includes a tour of the community, a round on the course, dinner at Citico’s, and a look at available properties.
