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Illinois Taxes Neither Military Pay Nor Military Retirement

Both come out on Schedule M. Illinois is one of the few states that exempts serving pay and retired pay alike.

Verified August 18, 2026

What this benefit is

Both come out on Schedule M. Illinois is one of the few states that exempts serving pay and retired pay alike.

What it's worth: The whole amount subtracted, at Illinois’s flat 4.95%

  • Estimated against the flat Illinois individual income tax rate of 4.95% applied to the subtracted amount.
  • Unlike the retirement exclusion in several other states, Illinois applies no cap and no age or income condition.

Who is entitled to it

  • You draw military retired pay, which Illinois subtracts in full.
  • You are serving, and Illinois does not tax military pay.
  • Your home is in Illinois.

Not sure whether that describes you?

Answer a few questions about this benefit specifically — we only ask what this one actually depends on, and we stop as soon as we know.

How to claim it

Deadline: April 15, with your return
  1. 1Subtract the federally taxed portion of your military retirement on Schedule M — the amount included in your federal return, not the gross.
  2. 2Serving members subtract military pay on the same schedule.
Form
IL-1040 Schedule M
File with
The Illinois Department of Revenue, with your annual return
Documents you will need
form 1099 r · leave and earnings statement
Annual
Claimed once a year.
Worth knowingThe subtraction is of the federally taxed portion included in your Illinois base, not the gross figure on the 1099-R. Entering the gross is the common filing error.

Sources

This finder provides an informational match, not a government eligibility determination. The responsible agency decides your application.