Does Illinois tax military retirement pay?
Not taxed
No. Illinois subtracts federally taxed income from government retirement plans, along with qualified employee plans, IRAs and Social Security. Military retired pay is a government retirement plan payment.
In the state's own words
Copied word for word from the official documents linked below each quote:
“government retirement and government disability plans”
“You may subtract the amount of federally taxed Social Security and retirement income included in your adjusted gross income on Form IL-1040, Line 1, that you received from”
Other retirement income in Illinois
No. Illinois lets you subtract federally taxed retirement income from qualified employee benefit plans, including 401(k) plans, and from IRAs and self-employed retirement plans. The Illinois pension page has the details, and the Illinois Social Security page covers Social Security. No. Illinois lets you subtract the Social Security that is taxed on your federal return.
Before you file or move
This page is about state income tax only. Your federal return has its own rules for military retired pay, and VA disability compensation is a separate benefit from retired pay. State rules change, and the details (age, years, which kinds of pay qualify, survivor benefits) matter. Check with the Illinois Department of Revenue before you file or move.
Other states in the same group
Check our work
The answer above comes from these documents. Follow the link and compare.
- IL-1040 instructionsIllinois Department of Revenue. Read on November 13, 2026.
- Social Security benefits and certain retirement plansIllinois Department of Revenue. Read on November 13, 2026.