Illinois Tax Filing: Flat Tax, IL-1040 and Reciprocity Rules

Updated October 14, 2026

A flat rate, an exemption allowance and a retirement subtraction

The Illinois Department of Revenue says Illinois income tax is figured by multiplying net income by a flat rate. There are no brackets. The calculation starts with adjusted gross income from your federal return, adds or subtracts certain items, then lowers the result by exemptions to reach net income. The exemption allowance is adjusted for the tax year, so check the current instructions for the amount.

Retirees get the most notable break. The Department's instructions say certain retirement income, such as pensions, Social Security, railroad retirement and governmental deferred compensation, may be subtracted from your Illinois income. Publication 120 on the Department's site explains the details. Read it before you decide what to leave off.

A resident must file if they had to file a federal return, or if their Illinois base income is greater than their exemption allowance.

Filing the IL-1040 and the six-month extension

• E-file. MyTax Illinois, the Department's online system, is free. Approved tax software also works. The Department says filing electronically and asking for direct deposit is still the fastest way to get a refund.
• Due date. April 15, or the next business day if it falls on a weekend or holiday.
• Extension. Illinois gives an automatic six-month extension to file, to October 15 for calendar-year filers. No form is needed. If you get a longer federal extension, Illinois allows it too.
• Paying. The extension does not give more time to pay. Pay what you owe by the April date.

Our extension guide explains the federal side, and the tax deadlines page keeps the dates together.

Working in Illinois, living elsewhere

Illinois has reciprocal agreements with Iowa, Kentucky, Michigan and Wisconsin. Residents of those four states who earn wages in Illinois are not taxed by Illinois on that employee pay. They give their employer Form IL-W-5-NR so Illinois tax is not withheld.

Everyone else with Illinois income files Schedule NR with the IL-1040. The Department explains the two groups:

• Nonresidents are taxed only on Illinois-source income. They file if that income creates tax, or if they are due a refund of Illinois withholding.
• Part-year residents are taxed on all the income they received while a resident, whatever the source, plus Illinois-source income while a nonresident.

Schedule NR uses two columns. Column A holds your federal totals. Column B holds the Illinois portion. A part-year resident may also claim a credit for tax paid to another state on income earned while an Illinois resident.

Military families and spouses

Illinois treats military pay differently for residents and nonresidents.

• Nonresident service members do not report military pay to Illinois at all. They file only if they have other Illinois-source income that creates tax.
• Residents and part-year residents start with military pay in federal income, then may subtract tax-exempt military compensation, which the Department defines as pay for duty in the armed forces, including basic training.
• Residency choice. Under the Veterans Auto and Education Improvement Act of 2022, as the Department cites it, a service member and spouse can choose their state of residence for tax purposes. The options are the service member's domicile, the spouse's domicile, or the permanent duty station.
• Spouse wages. A nonresident spouse who is in Illinois only to be with the service member, or who has chosen a matching domicile, does not owe Illinois tax on wages earned in Illinois. The spouse files the IL-1040 with Schedule NR and marks the Military Spouse box.

Leaving Illinois for Florida

Illinois taxes a part-year resident on everything received while a resident, no matter where it was earned. After you move, only Illinois-source income stays taxable. That means the moving date matters. Pay, bonuses and sold investments from before it follow resident rules.

Keep your move date, final Illinois pay statements and records of any Illinois rental or business income. You file the IL-1040 with Schedule NR for the move year. Our Illinois to Florida guide covers how to show your new home.

Paperwork Illinoisans forget

• Illinois-only credits. The Department's current instructions list an Illinois Earned Income Tax Credit and an Illinois Child Tax Credit, both on Schedule IL-E/EITC. The child credit is tied to the Illinois earned income credit.
• Medical debt relief. A new subtraction for medical debt relief is on Schedule M.
• Estimated payments. The Department says estimated tax is required if you expect to owe more than a set amount after withholding and credits. The IRS says self-employed people generally must make federal estimated payments too. Our estimated tax guide covers the federal side.
• Amending. Use Form IL-1040-X to fix a filed return.

Mistakes that delay an Illinois return

• Skipping IL-W-5-NR. A Wisconsin or Iowa commuter who does not give it may have Illinois tax withheld and must file to get it back.
• Missing the date of birth. The current form requires a full date of birth on line A.
• Leaving retirement income in. Pensions and Social Security may be subtractions, so do not copy the federal total.
• Mixing up the columns. On Schedule NR, Column A is federal and Column B is Illinois.
• Treating the extension as time to pay. Interest and penalties can follow a balance paid late.

Filing from Illinois with Zero Fuss Taxes

We prepare returns remotely from our Longwood, Florida office for clients in all 50 states, so you never need to visit. A real preparer reviews and signs your return, and you start with a free quote.

FAQ

Sources

• tax.illinois.gov/forms/incometax/currentyear/individual/il-1040-instr/general-in
• tax.illinois.gov/forms/incometax/currentyear/individual/il-1040-instr/what-is-ne
• tax.illinois.gov/forms/incometax/currentyear/individual/il-1040-schedule-nr-inst
• tax.illinois.gov/research/publications/pubs/illinois-filing-requirements-for-mil
• tax.illinois.gov/research/taxinformation/income/individual.html
• irs.gov/filing/individuals/when-to-file
• irs.gov/businesses/small-businesses-self-employed/estimated-taxes

General information, not tax advice for your specific situation. Rules can change, so check the official sources below. Zero Fuss Taxes is a PTIN-holding tax preparation firm. We are not a CPA firm, enrolled agents or attorneys.