Display omitted •Ionic Liquids favor the production of acid formic and methanol from CO2 hydrogenation.•Ionic Liquids improve product yields to ~ 65% for formic acid and ~ 68% for methanol.•CO2 hydrogenation occurs at ambient temperature and low pressure conditions.•Methanol is produced with less stoichiometric hydrogen requirement. Direct hydrogenation of carbon dioxide (CO2) to formic acid is unfavorable thermodynamically, which makes its production limited. In this study, a thermodynamic analysis of CO2 hydrogenation to binary product systems of methanol and formic acid promoted by ionic liquid (IL) (1-ethyl-2,3-dimethylimidazolium nitrite, (EdmimNO2) is presented. The analysis is conducted in Aspen Plus using the Gibbs energy minimization approach combined with a vapor–liquid equilibrium (VLE) for the solvation of CO2 in IL. It is demonstrated that solvating CO2 in ILs is an attractive alternative to overcome the thermodynamic difficulty associated with the product yield, especially formic acid. The EdmimNO2 promoted system is very effective for the simultaneous production of formic acid and methanol at 25 °C and 17 bar with a yield of 35% formic acid and 30% methanol at a CO2/H2/IL ratio of 1/2/2. The results show a marked improvement in the yield of formic acid to other previously conducted studies on formic acid production.