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2026 rules · verified against Illinois's primary source
Illinois fully exempts military retirement pay from state income tax.
Illinois does not tax military retirement pay; the full federally taxed amount from a government retirement plan, including military plans, is subtracted on IL-1040. Illinois has a flat 4.95% tax.
Treatment
fully exempt
Top marginal rate
4.95%
Source: https://tax.illinois.gov/research/publications/pubs/retirement-income.html · verified July 2026
Estimated Illinois state income tax on your military retirement, using the top marginal rate on the taxable portion (an upper bound; your effective rate is usually lower).
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