The Short Answer
Active-duty pay included in federal AGI is fully exempt (subtracted) from Illinois income; income excluded from federal AGI is not eligible for the subtraction. Your base pay is set by the federal pay table — identical to every other state for your rank and years of service. What actually changes in Illinois is your BAH (averaging $1,600/mo without dependents and $2,000/mo with dependents) and how Illinois treats the taxable portion of your pay.
State tax status: ✓ TAX EXEMPT
2026 Worked Example — E-5, 6 Years, With Dependents in Illinois
Here is how the math actually lands for a mid-career enlisted member stationed in Illinois, built the way I read my own LES. Base pay and BAS are federal; the Illinois BAH figure is the state average.
| Monthly line item | Amount | Taxable? |
|---|---|---|
| Base pay (E-5, over 6 yrs) | $3,874 | Yes (federal + state) |
| BAH with dependents (Illinois avg) | $2,000 | No — tax-free |
| BAS (enlisted) | $476.95 | No — tax-free |
| Gross monthly entitlements | $6,350.95 | — |
| Taxable income (base pay only) | $3,874 | — |
| Est. Illinois state income tax | varies — see notes | — |
Only the $3,874 of base pay is taxable — the $2,476.95 of BAH + BAS is completely tax-free. Run your exact rank, ZIP, and dependency status in the Military Pay Calculator for a precise estimate.
How Illinois Taxes Each Type of Military Pay
Active-Duty Base Pay
Active-duty pay included in federal AGI is fully exempt (subtracted) from Illinois income; income excluded from federal AGI is not eligible for the subtraction.
Guard & Reserve Drill Pay
Guard and Reserve pay included in federal AGI is also subtracted, making it effectively exempt in Illinois.
Military Retirement Pay
Military retirement pay is fully exempt from Illinois income tax.
VA Disability Compensation
VA disability compensation is exempt federally and is not taxed by Illinois.
SCRA & Residency in Illinois
A sailor in training at Great Lakes who is a legal resident of another state owes no Illinois income tax on military pay under SCRA.
This is the single most misunderstood rule in military pay. Your home of record / state of legal residence — not your duty station — generally determines who can tax your military pay. Changing it is a deliberate act, not something that happens automatically when you PCS.
Major Military Installations in Illinois
- Naval Station Great Lakes
- Scott Air Force Base
- Rock Island Arsenal
BAH is set by the Military Housing Area covering your duty ZIP. Verify your exact rate at the official DoD BAH lookup.
Official Sources
FAQ — Military Pay in Illinois
Does Illinois tax my military base pay?
Active-duty pay included in federal AGI is fully exempt (subtracted) from Illinois income; income excluded from federal AGI is not eligible for the subtraction.
Is my BAH taxed in Illinois?
No. BAH is federally tax-free and is never counted as income for Illinois state income tax, regardless of how Illinois treats base pay.
Does Illinois tax military retirement pay?
Military retirement pay is fully exempt from Illinois income tax.
I'm stationed in Illinois but my home of record is elsewhere — who taxes me?
A sailor in training at Great Lakes who is a legal resident of another state owes no Illinois income tax on military pay under SCRA.