Illinois does not tax Social Security benefits

Illinois is one of the states that does not impose a state income tax on Social Security retirement, survivor, or disability benefits. If Social Security is your only income source, you will not owe Illinois state income tax on those payments. This applies whether you receive benefits as a retiree, as a surviving family member, or as a person with a disability.

However, the federal government may still tax your Social Security benefits depending on your total income from all sources. Illinois's decision not to tax Social Security does not change what you owe to the IRS. You should review your federal tax situation separately, as the rules are different.

Key Takeaways

  • Illinois does not tax Social Security benefits at the state level, regardless of how much you receive or your other income.
  • Federal taxation of Social Security depends on your combined income (wages, pensions, interest, and half your Social Security), not on state rules.
  • If you have both Social Security and other income in Illinois, you pay state tax only on the non-Social Security portion.
  • You do not need to report Social Security income on your Illinois state tax return, though you may still file a federal return.

When you might still owe federal tax on Social Security

The federal government uses a formula called "combined income" to decide whether your Social Security is taxable. Combined income includes your adjusted gross income, any tax-exempt interest, plus half of your Social Security benefits. If your combined income exceeds certain thresholds, the IRS will tax a portion of your benefits.

For 2024, if you file as single and your combined income exceeds $25,000, up to 50 percent of your benefits may be taxable. If your combined income exceeds $34,000, up to 85 percent may be taxable. For married couples filing jointly, those thresholds are $32,000 and $44,000. These thresholds have not changed since 1984 and do not adjust for inflation.

Illinois does not use these same thresholds. The state simply does not tax Social Security at all. So if you owe federal tax on your benefits, you will report that on your federal return (Form 1040), but you will not report it again on any Illinois state form.

Social Security plus other Illinois income

Many people receive Social Security and also have income from work, a pension, or investments. In Illinois, you pay state income tax on the non-Social Security income at the state's flat rate of 4.95 percent. The Social Security portion is excluded entirely.

For example, if you receive $20,000 in Social Security and $15,000 in pension income, Illinois taxes only the $15,000. You do not report the Social Security on your state return. You would file a federal return to determine whether any of your Social Security is taxable under federal rules, but that does not change what you owe Illinois.

What documents you need and where to file

Social Security income appears on Form SSA-1099, which you receive from the Social Security Administration by January 31 each year. You do not need to attach this form to your Illinois return because Illinois does not tax the income. However, you should keep it for your records and for your federal return.

If you have other income subject to Illinois tax, you file Form IL-1040 (Illinois Individual Income Tax Return) with the Illinois Department of Revenue. You report only the non-Social Security income on this form. If Social Security is your only income, you typically do not file an Illinois state return, though you may still need to file a federal return depending on your total combined income and filing status.

Pensions and other retirement income in Illinois

Illinois also excludes certain pension income from state taxation, but the rules differ from Social Security. Military pensions are fully excluded. Public employee pensions (from Illinois state and local government jobs) are excluded if you were hired before 2011. Private pensions and 401(k) withdrawals are taxable in Illinois.

If you receive both Social Security and a private pension, you pay Illinois tax on the pension but not on the Social Security. If you receive both Social Security and a public pension from an Illinois government employer, neither is taxed by the state. The federal government, however, may tax both depending on your combined income.

Frequently Asked Questions

Do I need to file an Illinois tax return if I only get Social Security?

No. Since Illinois does not tax Social Security and you have no other income, you do not file a state return. You may still need to file a federal return depending on your combined income, filing status, and whether you have other income sources. Check IRS guidelines for your situation.

Will getting Social Security affect my Illinois state taxes?

No. Social Security does not count toward your Illinois taxable income, so it will not increase what you owe the state. If you have other income, you pay tax on that, but the Social Security portion is always excluded.

What if I moved to Illinois from another state that taxes Social Security?

Once you are an Illinois resident, Illinois does not tax your Social Security, even if you received it while living elsewhere. Your previous state may have taxed it, but that is handled on your prior-year return for that state. Going forward, only Illinois rules apply to your state tax situation.

Can I deduct Social Security taxes I paid while working?

No. Social Security taxes (FICA) paid during your working years are not deductible on any state or federal return. They are considered a contribution to your future benefits. Once you receive benefits, neither Illinois nor the federal government refunds those taxes.

Does Supplemental Security Income (SSI) get taxed by Illinois?

No. SSI, like Social Security retirement and disability benefits, is not taxed by Illinois. However, SSI is also generally not taxed by the federal government. If you receive SSI, you typically do not file a federal return unless you have other income that requires it.