KEY TAKEAWAYS
- Illinois does not tax active-duty, Guard or Reserve pay, and military retired pay is subtracted along with other government retirement income, so most military households owe Illinois tax only on civilian income.
- Veterans rated 70% or more have the first $250,000 of equalized assessed value of their home exempt, which wipes out the tax on most homes. Ratings of 30% to 69% get $2,500 or $5,000 off EAV.
- The Illinois Veteran Grant pays tuition and mandatory fees at Illinois public colleges for up to 120 eligibility units, about four years full time, and can be stacked with the GI Bill.
- Five state veterans homes charge no more than $1,720 a month as of June 2025, based on income only, and inability to pay does not block admission.
- Veterans with a 10% or higher service-connected rating hunt and fish free in Illinois regardless of where they live, and veterans get 5 or 10 preference points on state civil service exams.
- Illinois Income Tax for Veterans and Military Retirees
- Illinois Property Tax Exemptions for Veterans
- Education Benefits: IVG and the MIA/POW Scholarship
- Illinois Veterans Homes
- State Hiring Preference and Leave Rights
- Hunting, Fishing and Camping
- Driver’s Licenses and Plates
- Veterans Cemeteries in Illinois
- Benefits for Surviving Spouses and Families
- How to Apply for Illinois Veteran Benefits
- Frequently Asked Questions
Illinois treats military income about as well as any state that has an income tax: active-duty pay and retired pay are both subtracted, and so is most other retirement income. The bigger benefits are property tax relief, which starts at a 30% rating, and the Illinois Veteran Grant, which covers tuition at public colleges. Property taxes in Illinois are among the highest in the country, so the disabled veterans exemption is often worth thousands of dollars a year. This guide covers what Illinois offers in 2026, who qualifies and where to apply.
Illinois Income Tax for Veterans and Military Retirees
- Active-duty, Guard and Reserve pay: the Illinois Department of Revenue lets you subtract pay for duty in the armed forces, including basic training, and pay for Reserve or National Guard duty, including Guard service for another state. Attach your W-2. Combat pay that is already excluded from federal income cannot be subtracted twice.
- Military retired pay: Illinois subtracts federally taxed income from government retirement and disability plans, including military plans, on Form IL-1040, Line 5. Social Security and most qualified retirement plan income are subtracted too.
- VA disability compensation is tax-free under federal law in every state.
- Military spouses: under the Military Spouses Residency Relief Act, a spouse living in Illinois because of the service member’s orders can keep their home-state residency for tax purposes.
Illinois’ flat income tax still applies to civilian wages, business income and investment income. Our military retirement pay calculator estimates your pension, and the Survivor Benefit Plan guide explains the annuity your spouse would receive.
Illinois Property Tax Exemptions for Veterans
Standard Homestead Exemption for Veterans with Disabilities
This exemption reduces the equalized assessed value (EAV) of the home you own or lease and live in. The Illinois Department of Revenue sets the amounts by VA rating:
| VA service-connected rating | Reduction in EAV |
|---|---|
| 30% to 49% | $2,500 |
| 50% to 69% | $5,000 |
| 70% or more | First $250,000 of EAV exempt |
| World War II veterans (tax year 2024 and later) | Exempt regardless of rating |
Illinois assesses homes at about one-third of market value, so $250,000 of EAV covers a home worth roughly $750,000, which is most homes in the state. At a typical Illinois tax rate, the $5,000 reduction for a 50% rating saves a few hundred dollars a year; the 70% exemption usually saves the whole bill. The exemption is administered by your county, and most counties ask veterans to file Form PTAX-342 with a VA rating letter each year. An unremarried surviving spouse who lives in the home and holds title can keep the exemption, and can transfer it to a new home by filing PTAX-342.
Moving from 60% to 70% changes the benefit from $5,000 off EAV to a near-total exemption. Our guides to a VA rating increase and 70% VA disability explain what that takes.
Returning Veterans’ Homestead Exemption
A veteran returning from active duty in an armed conflict gets a $5,000 reduction in EAV on their principal residence for two consecutive tax years: the year they return and the next. File Form PTAX-341 with your county’s Chief County Assessment Office.
Specially Adapted Housing Exemption
Veterans whose homes were adapted for a service-connected disability, including with a VA Specially Adapted Housing grant, can take up to $100,000 off assessed value. It stays in effect while the veteran, spouse or unremarried surviving spouse lives there.
Buying in Illinois? Our VA loan guide covers $0-down financing, and veterans receiving VA disability compensation are exempt from the VA funding fee.
Education Benefits: IVG and the MIA/POW Scholarship
Illinois Veteran Grant (IVG)
The IVG pays eligible tuition and mandatory fees, such as activity, health and technology fees, at Illinois public two- and four-year colleges, for undergraduate or graduate study. To qualify you need:
- At least one year of federal active duty, or federal active duty in a foreign country during hostilities. Guard and Reserve drill time does not count
- An honorable discharge from your most recent federal active duty, or current honorable service
- Current Illinois residence, or at least 15 consecutive years as an Illinois resident after leaving active duty
You get up to 120 eligibility units, about four years of full-time enrollment; a semester of 12 or more hours uses 12 units. The IVG can be combined with the Post-9/11 GI Bill, so many veterans use it to cover what the GI Bill does not, or to stretch their GI Bill months. Apply once through the ISAC Student Portal; processing takes about 12 weeks. Our Post-9/11 GI Bill guide explains how the federal benefit works.
Deceased, Disabled and MIA/POW Veterans’ Dependents Scholarship
The MIA/POW Scholarship pays full tuition and mandatory fees at Illinois public colleges for up to four years, using a 120-point system, for the spouse or child of a veteran who is MIA, a POW, rated 100% permanent and total (including unemployability), or whose death VA rated service-connected. The veteran must have been an Illinois resident when entering service, within six months of entering, or for 15 consecutive years after entering. The benefit expires 12 years after first enrollment. A 2025 law (P.A. 104-0238) has IDVA set eligibility by rule starting in 2026, so check the current rules when you apply.
Children of veterans can also use transferred GI Bill benefits or VA’s DEA program; our guide to disabled veteran education benefits compares them.
Illinois Veterans Homes
Illinois runs five veterans homes:
| Home | What it offers |
|---|---|
| Anna | 50 skilled nursing beds and 12 domiciliary spaces in six apartments |
| Chicago | 200 private rooms with skilled nursing and memory care; opened January 2022 |
| LaSalle | Long-term care |
| Manteno | Long-term care, with an on-site veterans cemetery |
| Quincy | Domiciliary, skilled nursing and memory care; founded 1886, the state’s largest and oldest |
Cost
The maximum monthly charge was $1,720 as of June 2025 and rises each year with the Social Security cost-of-living adjustment. The charge is based only on the income of the veteran and spouse, not assets, and inability to pay does not prevent admission. Residents receiving VA Aid and Attendance pay an extra charge equal to that allowance; see our VA pension and Aid and Attendance guide.
Eligibility
- An honorable discharge and qualifying service, such as one day of wartime service, 24 months of continuous active duty if you enlisted after September 7, 1980, or retirement for a service-connected disability
- Disabled and unable to earn a living
- Entered service as an Illinois resident, or lived in Illinois for the year before applying
A widow or widower of an eligible veteran can be admitted to Anna or Quincy when beds are available. Contact the Adjutant’s office at the home you want: Anna (618) 833-5394, Chicago (773) 794-3763, LaSalle (815) 410-8375, Manteno (815) 907-3506 or Quincy (217) 640-2488.
State Hiring Preference and Leave Rights
Veterans’ preference for state jobs
Under the Illinois Personnel Code, points are added to your exam score and used to rank candidates:
| Who | Preference |
|---|---|
| Veterans with a VA service-connected disability, or Purple Heart recipients | 10 points |
| Veterans who served during a time of hostilities (at least 6 months, the duration of hostilities, or discharged for hardship or a service-connected disability) | 5 points |
| Other veterans with 6 months’ honorable service, or 4 years in the Guard or Reserve | 3 points |
| One parent of an unmarried veteran who died or was disabled from service | 10 points |
The unremarried surviving spouse of a veteran who died of a service-connected cause, or the spouse of a veteran whose disability keeps them from civil service work, gets the preference the veteran would have had.
New leave rights in 2026
Two recent laws listed by IDVA help working veterans. Starting January 1, 2026, state employees who are veterans get 4 days a year of leave for VA-authorized medical care (P.A. 104-0136). And the renamed Military Leave Act lets employees take up to 8 hours a month, capped at 40 hours a year, to serve on a funeral honors detail (P.A. 104-0078). For federal jobs, see our guide to federal jobs for veterans.
Hunting, Fishing and Camping
- Free hunting and fishing: veterans with a 10% or greater service-connected rating, or a total disability pension, do not need an Illinois hunting or fishing license, regardless of their state of residency. Get the Disability Affidavit card for hunting and fishing privileges from an IDVA Veteran Service Office with your DD-214 and current VA verification. See the IDVA permits page.
- Free camping: Illinois residents who receive 100% service-connected compensation, have permanently lost the use of one or both legs, or are former POWs pay no camping fee at IDNR parks, though a $10 utility fee still applies at electric sites. A spouse, minor children or grandchildren under 18 camping with the veteran are covered. Show the IDVA disability certification card when you register; see the IDNR camping discounts.
Illinois state parks do not charge an entrance fee, so the savings are in camping and licenses. For national parks, every veteran gets a free lifetime pass; see our national park pass guide.
Driver’s Licenses and Plates
- Veteran on your license or ID: bring a DD-214, Form 13038, DD-2 (Retired), federal Veteran ID card or VA benefit summary letter to any Secretary of State facility. The Secretary of State verifies your status with IDVA. Adding it at your regular renewal is free; adding it early costs $5 for a driver’s license or $10 for a state ID, and veterans over 65 can get an updated state ID free. See IDVA’s license page.
- Military plates: Illinois offers dozens of military and veteran plates, including branch, campaign, Purple Heart, POW, Gold Star and disabled veteran designs, through the Secretary of State.
Our guide to veteran IDs and proof of service covers federal ID options.
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Veterans Cemeteries in Illinois
Illinois has cemeteries at two of its veterans homes. Sunset Cemetery at the Quincy Veterans Home provides interment and perpetual care for eligible veterans and spouses, with more than 7,000 burials dating to the Civil War; the Manteno home also has a cemetery. Both are tied to the homes, so most Illinois veterans are buried in VA national cemeteries, including Abraham Lincoln National Cemetery in Elwood, Rock Island National Cemetery, Camp Butler National Cemetery near Springfield and Danville National Cemetery. Burial, a headstone and a flag are free there for eligible veterans and spouses. See our VA burial allowance guide for what VA pays toward other costs.
Benefits for Surviving Spouses and Families
- Property tax: an unremarried surviving spouse keeps the disabled veterans homestead exemption and can transfer it to a new home with PTAX-342. The specially adapted housing exemption also continues for a surviving spouse who lives there.
- Education: spouses and children of veterans who died of service-connected causes, are 100% P&T or are MIA or POW can use the MIA/POW Scholarship.
- State jobs: the unremarried surviving spouse of a veteran with a service-connected death gets the veteran’s preference points.
- Veterans homes: widows and widowers can be admitted to Anna or Quincy when beds are available.
Federal survivor benefits usually matter more. See our guides to VA benefits for a veteran’s widow, DIC and CHAMPVA.
How to Apply for Illinois Veteran Benefits
- Gather documents: your DD-214 (member 4 copy) and a current VA benefit summary letter showing your combined rating.
- Visit an IDVA Veteran Service Office. The Illinois Department of Veterans Affairs has accredited officers who file VA claims and issue the disability card for hunting, fishing and camping, all free.
- File PTAX-342 with your county assessment office for the disabled veterans homestead exemption, and renew it each year if your county requires.
- Apply for the IVG through the ISAC Student Portal at least 12 weeks before the end of the term.
- Claim the military subtractions on your IL-1040 and attach your W-2 or federal return.
Our VA disability ratings guide explains how ratings are set. Comparing states? See our guides to Indiana, Wisconsin and Missouri, or the veteran benefits by state guide for all 50.
RELATED READING
Property tax deductions, retired pay rules and state programs next door.
VA Veterans Benefits: The Complete Guide →
Health care, compensation, education, home loans and burial, every major VA program in one place.
Property tax breaks, income tax exemptions and state programs in all 50 states.
Frequently Asked Questions
No, in practice. Illinois lets you subtract federally taxed income from government retirement and disability plans, including military plans, on Form IL-1040, Line 5. Active-duty, Guard and Reserve pay are also subtracted, so most military households pay Illinois tax only on civilian income.
It depends on your VA rating. A 30% to 49% rating takes $2,500 off your home’s equalized assessed value, 50% to 69% takes $5,000 off, and 70% or more exempts the first $250,000 of EAV, which covers most homes completely. World War II veterans are exempt regardless of rating. File Form PTAX-342 with your county assessment office.
Yes. The IVG can be combined with the Post-9/11 GI Bill, the Montgomery GI Bill and the Illinois National Guard Grant. It covers tuition and mandatory fees at Illinois public colleges for up to 120 eligibility units, about four years full time. You need at least one year of federal active duty and an honorable discharge, and you must live in Illinois.
No more than $1,720 a month as of June 2025, and the cap rises each year with the Social Security COLA. The charge is based only on the income of the veteran and spouse, not assets, and inability to pay does not prevent admission. Residents who receive VA Aid and Attendance pay an extra charge equal to that allowance.
Yes, with a 10% or higher service-connected rating or a total disability pension, regardless of where you live. Get the Disability Affidavit card from an IDVA Veteran Service Office with your DD-214 and current VA letter. Free camping is narrower: it is for Illinois residents rated 100%, former POWs and veterans who have lost the use of a leg.
Ten points for a veteran with a VA service-connected disability or a Purple Heart, 5 points for a veteran who served during a time of hostilities, and 3 points for other veterans with at least 6 months of honorable service or 4 years in the Guard or Reserve. The points are added to a passing score and used to rank candidates.
This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Illinois Department of Veterans Affairs, the Illinois Department of Revenue, the Illinois Student Assistance Commission, the Department of Defense, VA, or any government agency. Amounts and program rules change; confirm current terms with the Illinois Department of Veterans Affairs.