Calgary to Chicago: Derivatives, Energy-to-Commodities, and Illinois's Flat 4.95%

Calgary's energy traders and analysts have an obvious destination in Chicago's derivatives markets, and its engineers and consultants have one in the city's corporate and consulting sector. The tax picture is a moderate cut: Alberta's combined top rate of about 48% becomes about 42% in Illinois, with no Chicago city income tax. What Illinois charges instead is property tax and a 10.25% sales tax.

Key takeaways

• Alberta's roughly 48% top rate sets the departure tax. On a $300,000 unrealized gain, about $72,000.
• Illinois's flat 4.95% income tax; no city income tax in Chicago.
• Illinois starts from federal AGI and exempts most retirement income, which generally covers RRIF withdrawals.
• Alberta's 5% GST becomes 10.25% sales tax in Chicago.
• Cook County property tax runs near 2% effective. Illinois has an estate tax with a $4 million exemption. AHCIP ends on permanent departure.

The Alberta departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. Alberta real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 for illiquid assets. A Calgary corporation is deemed sold and becomes a US controlled foreign corporation after the move; wind it up before you go.

Chicago's side

Flat 4.95% state income tax; no city income tax; 10.25% sales tax in Chicago; property tax near 2% effective in Cook County with a homeowner exemption; estate tax on estates above $4 million with rates to 16%.

The RRSP in Illinois

Federally deferred under Article XVIII of the treaty and deferred for Illinois because the state starts from federal AGI. Illinois also subtracts most retirement income that is taxed federally, and RRIF income reported as pension income generally qualifies, which can make RRIF withdrawals free of Illinois tax. Canadian withholding is 25% on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit federally.

Who makes this move

Calgary energy traders to the CME and Chicago's commodities firms, Alberta engineers to Chicago's corporate and infrastructure employers, and Calgary consultants to the Chicago offices of the large firms.

Worked example

A Calgary energy trader moves to Chicago on June 30 with $250,000 of unrealized gain in a non-registered account, $500,000 in an RRSP, and a Calgary home sold in the departure year.

• Departure tax. $250,000 gain, $125,000 taxable, at about 48%: roughly $60,000.
• Home. Sold as a resident under the principal residence exemption.
• RRSP. No tax on departure; federal and Illinois deferral; RRIF income later likely exempt from Illinois tax.
• Chicago. Combined top rate about 42%. GST 5% becomes sales tax 10.25%. Property tax on a $700,000 home around $13,000 to $15,000.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

Effective July 1, 2017: 4.95 percent of net income. — Illinois Department of Revenue, Income Tax Rate, https://tax.illinois.gov/research/taxrates/income.html

Alberta's top personal income tax bracket: "15%" on "$362,961.01 and up" (2025). — Government of Alberta, Personal income tax, https://www.alberta.ca/personal-income-tax

Practitioner note

Illinois's retirement income subtraction is the feature Calgary retirees care about most, and it applies to RRIF income reported federally as pension income. The position should be documented in the first-year file; it saves 4.95% on every RRIF dollar thereafter.

See also: Weighing Florida instead? See the Canada-to-Florida guide, or the same city's Calgary to Miami guide.

Next step

Fairlight prepares the Alberta departure return, the corporate wind-up, and the first-year federal and Illinois returns. See cross-border pricing or book a call.