Form IL-1040 Guide

The shape of the return

Form IL-1040 is short, and it is short because Illinois does very little independent calculation. It takes your federal adjusted gross income, applies a handful of Illinois-specific additions and subtractions, subtracts an exemption allowance, and multiplies by 4.95%. Then credits and payments come off. That is the whole structure:

Everything downstream of Line 1 depends on getting the federal return right first, which is why an error on a federal schedule quietly propagates into Illinois. It is also why federal deductions taken below the AGI line — itemized deductions, the qualified business income deduction, the tips and overtime deductions — do nothing for Illinois. That single structural fact explains more Illinois tax surprises than anything else on this site.

No standard deduction, no itemizing

Illinois has neither. There is no standard deduction and no itemized deduction — no mortgage interest, no charitable giving, no state and local taxes, no gambling losses. The only across-the-board reduction is the personal exemption allowance: $2,925 per person for 2026 ($2,850 for 2025), plus $1,000 for each taxpayer or spouse aged 65 or over and another $1,000 for each who is legally blind.

That exemption disappears above $250,000 of federal AGI, or $500,000 joint — the same cliff that removes the property tax credit and the K-12 education credit, as covered on the property tax credit page. Three benefits, one line, no taper.

The absence of deductions is why a 4.95% flat rate produces more tax than people expect: it applies to a much broader base than a federal rate does. The mechanics of the rate itself are on the Illinois income tax rate page, and why Illinois has no brackets at all is covered on the tax brackets page.

The retirement subtraction

This is the most valuable line on the return and the reason Illinois is a strong state to retire in. Line 5 subtracts federally taxed retirement income in full, with no income limit and no partial exclusion:

• Distributions from qualified plans — 401(k), 403(b), IRA, SEP — including Roth conversion income and including early distributions before 59½;
• Government retirement and disability plans, including military;
• Governmental 457(b) deferred compensation;
• Social Security and railroad retirement benefits, to the extent federally taxed;
• Lump-sum gains on employer securities.

What is excluded matters just as much: non-qualified deferred compensation, non-government disability and deferred compensation plans, third-party sick pay, and amounts subject to ten-year averaging on Form 4972. An executive with a non-qualified deferral arrangement gets no Illinois relief on it at all, which is a genuinely large difference and one that rarely appears in "Illinois doesn't tax retirement income" summaries. The retirement taxes calculator models both sides.

Schedule M in practice

Most returns need Schedule M for one or two lines rather than all of them. The additions that come up most often are interest on other states' municipal bonds that is federally tax exempt, a child's interest and dividends reported on federal Form 8814, addition amounts from a K-1-P or K-1-T, and Illinois special depreciation. On the subtraction side:

• U.S. Treasury interest, which Illinois cannot tax;
• Bright Start, Bright Directions and College Illinois! contributions up to $10,000, or $20,000 filing jointly — one of the few genuine Illinois tax planning opportunities, and one that a great many Illinois parents never claim;
• Illinois ABLE account contributions, same limits;
• Military pay;
• Railroad unemployment and sick pay;
• Medical debt relief, new for tax year 2025.

Credits worth checking

Illinois credits are mostly nonrefundable, with one important exception:

The Illinois EITC is the one to check hardest, because Illinois expanded it beyond the federal credit: filers using an ITIN qualify, as do childless workers aged 18 to 24 and 65 and over — all groups the federal credit excludes. People who assume they do not qualify because they did not get the federal credit are frequently wrong.

Use tax, deadlines and penalties

Line 21 reports use tax on purchases made without Illinois sales tax — the online and out-of-state buying that sellers did not collect on. It is 6.25% generally and 1% on qualifying food and drugs, and rather than reconstruct a year of receipts you may use the table, which runs from $3 at low income up to $44 in the $75,001 to $100,000 band, and 0.05% of AGI above $100,000. Where annual use tax exceeds $600 — $1,200 joint — it goes on Form ST-44 instead. The sales tax calculator covers the rates on the other side of the same transaction.

The return is due 15 April, with an automatic six-month extension to 15 October requiring no form and no request. That is an extension to file only. Late filing costs the lesser of $250 or 2% of the tax, with more if you ignore a notice for 30 days; late payment costs 2% for 30 days and 10% thereafter; interest runs daily at the federal underpayment rate. If you are likely to owe, pay by 15 April even if the return itself is not ready.

MyTax Illinois files electronically for free, with no income limit. If you owed last year, the estimated payments calculator sizes the quarterly installments that avoid a repeat, and the refund calculator compares your liability against what has already been withheld.