Illinois
Military Benefits

Military Pay & State Income Tax

Illinois has a flat 4.95% state income tax rate that applies to most income, but military retirement pay receives full exemption, making Illinois especially favorable for retirees compared to many other states.

Illinois taxes personal income at a flat rate of 4.95%. Unlike states with graduated brackets, every dollar of taxable income above the standard exemption is taxed at the same rate. For active duty servicemembers who are Illinois residents, military base pay is subject to this flat 4.95% rate unless a specific exemption applies.

Illinois fully exempts military retirement pay from state income tax under 35 ILCS 5/203. This includes retirement pay from all branches of the U.S. Armed Forces, reserve component retirement, and National Guard retirement. There is no cap on the exemption amount; the full gross retirement pay is excluded from Illinois taxable income. Claim on Illinois Schedule M (Other Subtractions from Income). This is one of the most favorable military retirement tax treatments in the Midwest.

VA disability compensation is fully exempt from Illinois state income tax. Illinois honors the federal exclusion automatically. This applies to all ratings including partial ratings and Combat-Related Special Compensation (CRSC). No separate Illinois form is required to claim this exemption.

SBP annuity payments to surviving spouses of military retirees are treated as military retirement pay for Illinois income tax purposes and are fully exempt from the 4.95% flat tax. Surviving spouses should include SBP income on Illinois Schedule M as a subtraction from income.

Illinois does not provide a broad state income tax exemption for National Guard or Reserve drill pay or inactive duty training (IDT) pay. Pay received during state active duty ordered by the Governor of Illinois may qualify for exemption. Guard and Reserve members on federal orders should consult the Illinois Department of Revenue at (800) 732-8866 for current guidance.

Under the Veterans Benefits and Transition Act of 2018, military spouses who maintain legal domicile in another state are not required to pay Illinois income tax on wages earned in Illinois while accompanying their servicemember on military orders. File Illinois Form IL-W-5-NR (Employee's Statement of Nonresidence in Illinois) with your employer to stop withholding. If Illinois taxes were withheld, file Form IL-1040NR to claim a refund.

Property Tax Exemptions & Discounts

Illinois offers a full property tax exemption for 100% disabled veterans and multiple partial exemptions for other qualifying veterans, administered through county assessor offices.

Illinois veterans with a 100% service-connected disability rating from the VA receive a complete exemption from property taxes on their primary residence under 35 ILCS 200/15-165. The exemption applies to the home and the land it sits on. Apply through your county assessor's office with your VA award letter showing 100% disability. This exemption is among the strongest in the Midwest and applies regardless of the property's value.

The surviving spouse of a 100% disabled veteran who was receiving the full property tax exemption may continue to receive the exemption as long as they remain unmarried and occupy the property as their primary residence. The surviving spouse does not need to requalify or obtain a new VA rating. Apply through your county assessor and provide the veteran's death certificate.

Veterans with a service-connected disability rating between 30% and 49% receive a $2,500 reduction in the assessed value of their primary residence. Veterans rated 50% to 69% receive a $5,000 reduction. Veterans rated 70% or higher receive a $5,000 reduction and may qualify for additional exemptions. These amounts reduce assessed value, which then reduces the tax bill based on local tax rates. Apply annually or as a one-time perpetual application depending on your county.

Illinois servicemembers returning from active duty in an armed conflict qualify for a $5,000 reduction in assessed home value for the tax year they return. This is a one-time exemption per return from deployment. Contact your county assessor within the applicable tax year to claim it.

Active duty servicemembers who are deployed outside Illinois and whose primary residence would otherwise lose the standard homestead exemption (due to not occupying it) may still qualify for the exemption. Illinois law provides protections to ensure a servicemember's home does not lose its homestead status due to military deployment.

Vehicle Registration & Driver's License

Illinois provides SCRA protections for vehicle registration, free license plates for eligible disabled veterans, and extended license validity for servicemembers stationed out of state.

Active duty servicemembers stationed in Illinois are not required to register their vehicles in Illinois under SCRA. You may maintain your home-state plates and registration. Illinois Secretary of State offices cannot compel registration change based solely on military orders or physical presence in Illinois.

Illinois veterans with a service-connected disability are eligible for free Disabled Veteran license plates under 625 ILCS 5/3-616. Veterans rated 10% or more by the VA may qualify. The plates provide free registration and are recognized by Illinois tollways for reduced toll rates. Apply through the Illinois Secretary of State with VA award letter and DD-214.

Veterans with qualifying disabilities who have Disabled Veteran plates may travel the Illinois Tollway system without paying tolls. An Illinois Tollway I-PASS transponder is required to be enrolled in the program. Register at illinoistollway.com or call (800) 824-7277. This is particularly valuable for Scott AFB families commuting on I-255 and I-64.

Illinois driver's licenses for servicemembers stationed outside Illinois or deployed do not expire during the period of military service. The license remains valid for 90 days after discharge or return to Illinois. Renew within that 90-day window upon return. Spouses of active duty servicemembers may also qualify for extended validity.

Military spouses who maintain legal domicile in another state may keep their home-state vehicle registration and driver's license while residing in Illinois due to military orders. Illinois cannot require a spouse to obtain Illinois plates or a license based on physical presence accompanying a servicemember.

Military Spouse Employment & Licensing

Illinois has enacted professional license reciprocity for military spouses, allowing expedited license transfer for dozens of licensed professions when relocating to Illinois on military orders.

Illinois law (225 ILCS) requires licensing boards to provide expedited processing of license applications for military spouses who hold a valid equivalent license from another state. The servicemember must be stationed in Illinois on military orders. Covered professions include nursing, cosmetology, real estate, physical therapy, social work, mental health counseling, and more. Contact the specific Illinois Department of Professional Regulation board for your profession at (312) 814-4500.

Under Illinois law (820 ILCS 405), a military spouse who voluntarily leaves employment to relocate with their servicemember due to a PCS move is eligible for unemployment benefits. They are not disqualified for voluntarily leaving work. The spouse must have earned Illinois wages in the base period and be able and available to work in Illinois after the relocation.

Illinois participates in interstate teaching license reciprocity for military spouses. A licensed teacher from another state relocating to Illinois on military orders can apply for an Illinois Professional Educator License through an expedited process. Contact the Illinois State Board of Education Educator Licensure at (217) 557-6763 or isbe.net for current reciprocity requirements.

The Illinois Department of Financial and Professional Regulation (IDFPR) accepts real estate license applications from military spouses on an expedited basis. Illinois has reciprocity or reduced examination requirements with several states. Spouses holding an active real estate license from another state should contact IDFPR at (888) 473-4858 to confirm current reciprocity agreements before relocating.

A military spouse who maintains domicile in another state and works remotely for an out-of-state employer while living in Illinois on military orders may be exempt from Illinois income tax on those wages under VBTA 2018. File Illinois Form IL-W-5-NR with your employer. Illinois-source income from Illinois-based clients or employers may remain taxable. Consult a military-aware CPA for complex remote work situations.

SCRA: Federal Protections That Apply in Illinois

Illinois courts and landlords are required to honor all SCRA protections. Scott AFB and NS Great Lakes JAG offices provide free legal assistance for SCRA-related issues.

You can terminate any Illinois residential lease with 30 days' written notice upon receiving PCS orders or a deployment of 90 or more days. Deliver written notice and a copy of orders to your landlord. Termination is effective 30 days after the next rent due date following delivery of notice. Illinois landlords cannot charge early termination fees or penalties to servicemembers exercising SCRA rights.

Debts taken on before entering active duty, including mortgages, car loans, student loans, and credit cards, must be reduced to a maximum 6% interest rate upon written request with a copy of military orders. The interest above 6% is forgiven, not deferred. This is one of the most financially significant SCRA provisions for servicemembers carrying pre-service debt.

Illinois courts cannot allow foreclosure on a servicemember's primary residence during active duty and for 1 year after separation without a court order. Illinois is a judicial foreclosure state, meaning all foreclosures go through the courts, which provides an additional layer of protection and makes it easier for servicemembers to assert SCRA rights at the foreclosure filing stage.

Illinois landlords cannot evict an active duty servicemember or their dependents from a primary residence without a court order. The eviction protection applies when monthly rent does not exceed $10,542.60 (2026 figure, adjusted annually). Illinois courts in the Belleville and North Chicago areas near major installations are experienced with military eviction stays.

Illinois courts must grant at least a 90-day stay of civil proceedings when a servicemember cannot appear due to military service. Courts cannot enter a default judgment against an active duty servicemember without a hearing and an appointed attorney to protect their interests.

Education Benefits in Illinois

Illinois offers strong in-state tuition protections for military families, an Illinois Veteran Grant program, and Illinois National Guard tuition assistance, with multiple Military Friendly and Yellow Ribbon schools in the state.

Active duty servicemembers stationed in Illinois, their spouses, and dependents are eligible for in-state tuition at all Illinois public universities and community colleges immediately upon arrival, with no 12-month waiting period. This applies to the University of Illinois system, Southern Illinois University, Illinois State University, and all Illinois community colleges. Bring military orders to the registrar's office.

The Illinois Veteran Grant waives tuition and mandatory fees at Illinois public universities and community colleges for eligible Illinois veterans who served at least one year of active federal military service. Recipients must be Illinois residents for at least 6 months, have received an honorable discharge, and must attend an Illinois public institution. The IVG is administered by the Illinois Student Assistance Commission (ISAC) at (800) 899-4722 or isac.illinois.edu.

The Illinois National Guard (ING) Grant provides tuition and fee waivers at Illinois public colleges and universities for active Illinois Army and Air National Guard members. Recipients must be enrolled in a certificate or degree program and maintain satisfactory academic progress. Contact your unit education officer or ISAC at (800) 899-4722 for current eligibility requirements and application deadlines.

Multiple Illinois universities participate in the Yellow Ribbon Program for veterans who have 100% Post-9/11 GI Bill eligibility. Participating schools include Southern Illinois University Edwardsville (near Scott AFB), University of Illinois Springfield, Millikin University in Decatur, and Illinois State University in Normal. Verify current Yellow Ribbon participation and award amounts at benefits.va.gov/GIBILL before enrolling.

Illinois is a member of the Interstate Compact on Educational Opportunity for Military Children (MIC4). Military children transferring into Illinois schools receive enrollment grace periods, immunization waiver flexibility, credit transfer protections, and eligibility to continue extracurricular activities during the first semester. The Illinois MIC4 coordinator can be reached through the Illinois State Board of Education at (217) 782-4321.

Voting & Residency Rights

Illinois must honor your right to maintain home-state domicile and vote by absentee ballot under UOCAVA. Illinois installations have Voting Assistance Officers to assist with FPCA submissions.

Being stationed in Illinois does not change your legal domicile. You may continue to vote in your home state via absentee ballot under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA). Submit a Federal Post Card Application (FPCA) at FVAP.gov. Your installation's Voting Assistance Officer (VAO) can help you complete and submit your FPCA each election cycle.

If you want to vote in Illinois and claim it as your home state, register at vote.elections.il.gov. Illinois has a flat 4.95% income tax on most income (military retirement is fully exempt). If your home state has no income tax, consider whether switching domicile to Illinois is financially advantageous given your pay situation and retirement timeline.

Military spouses may independently maintain legal domicile in any state they choose under VBTA 2018, it does not have to match the servicemember's domicile. Illinois cannot require a spouse to establish Illinois domicile based on physical presence in the state accompanying a servicemember.

Illinois accepts the FPCA as both a voter registration form and an absentee ballot request. Ballots are transmitted electronically to UOCAVA voters who request electronic transmission. Illinois accepts fax or email return of marked ballots from overseas and deployed voters. Request your ballot at least 45 days before any primary or general election.

Illinois has robust early voting laws that benefit military families. Early voting begins 40 days before a general election and 15 days before a primary. Illinois also allows grace period registration through election day at an early voting site. Servicemembers and their families who are Illinois residents can take advantage of these extended windows.