Illinois tax deductions and write-offs (2026)

No. Illinois fully exempts military retired pay, along with most retirement income, from state income tax. Other retirement income: Distributions from qualified employer plans, 401(k)s, IRAs, and government pensions are subtracted from Illinois income and not taxed.

No. Distributions from qualified employer plans, 401(k)s, IRAs, and government pensions are subtracted from Illinois income and not taxed.

No. Illinois subtracts the full federally taxed portion of Social Security benefits, along with most retirement income, on Form IL-1040. The subtraction covers only U.S. Social Security; foreign social security is taxable.

Yes: Illinois offers the Illinois Earned Income Tax Credit, 20% of the federal EITC (refundable). Wider eligibility than the federal credit: ITIN filers, and workers without children aged 18–24 or 65+. Recipients with a child under 12 also get the Illinois Child Tax Credit, worth 40% of the Illinois EITC.

Only instead of income tax: itemizers in Illinois pick sales tax (6.25% state rate, about 8.98% with local taxes) or state income tax, whichever is bigger. The 1% state tax on groceries ended Jan. 1, 2026, but cities and counties may impose their own 1% grocery tax, and existing RTA and Metro-East transit grocery taxes remain.

Yes on your federal return if you itemize, within the $40,400 SALT cap. Illinois adds its own break: Credit equal to 5% of property tax paid on your Illinois home (Schedule ICR); not allowed if AGI tops $250,000 ($500,000 joint).

No: Illinois doesn't offer a renter's credit or rent rebate. Illinois has no state tax credit, deduction, or rebate specifically for renters. The Illinois Property Tax Credit (5% of property tax paid on a principal residence) requires that you own the home, so renters cannot claim it. Lower-income renters can still claim Illinois's earned income credit: 20% of the federal EITC.

No: Illinois doesn't base registration on your car's value, so it isn't deductible as personal property tax. Standard passenger plate renewal is a flat $151 per year; local city stickers such as Chicago's are also flat.

Illinois has a flat 4.95% tax, doesn't tax most retirement income, and gives a property tax credit of 5% of property taxes paid.

Yes on your Illinois return: $10,000 single / $20,000 joint per return. Only contributions to the state's own plan count. Bright Start, Bright Directions, or College Illinois only; deductions recaptured on nonqualified withdrawals and rollovers out.

Yes: Illinois Child Tax Credit: 40% of your Illinois EITC (which is itself 20% of the federal EITC) if you qualify for the Illinois EITC and have a dependent child under 12. Refundable. For 2025, the maximum Illinois EITC was $866 with one child, so the child credit topped out around $346.

Yes, as a business expense: Illinois charges $150 to form an LLC; ongoing: $75 annual report. Due before the first day of the anniversary month. Not verified here: Illinois Personal Property Replacement Tax (1.5%) on partnership-taxed LLC income.