Illinois Veteran Tax Exemptions 2026

Your VA disability compensation is not taxed by Illinois, which puts you on solid footing from the start. The state also runs a tiered property tax exemption that starts working for you well before you reach the top rating. Even a partial rating earns a meaningful reduction on your assessed home value, and that reduction grows as your rating climbs. Here is how the tiers work and how to claim what you are owed.

Does Illinois tax VA disability income?

No. Illinois does not tax VA disability compensation. The state treats it the same way the federal government does, which means it is left off your taxable income entirely. Whether you are rated 10 percent or 100 percent, your VA disability pay is not taxed by Illinois.

Illinois property tax exemption for disabled veterans

Tiered exemption by rating. $2,500 (30 to 49%), $5,000 (50 to 69%), full exemption (70%+).

The tiered structure in Illinois means you do not have to wait for a top rating to see real savings. Each step up in your rating brings a larger break, so claiming it at your current level and updating when your rating changes is the right move.

What rating do you need in Illinois?

The size of your break depends on your combined VA rating. In Illinois, the break is tiered, so even a partial rating can lower your property tax bill, and the amount climbs as your rating climbs. Not sure what your combined rating works out to? Run it through our VA disability calculator first, and if you are aiming for the top tier, check whether you qualify for Permanent and Total status.

How to claim your Illinois exemption

1. Confirm your current combined rating and whether it is Permanent and Total. Your VA award letter shows both.
2. Gather your DD-214 and your VA disability award letter. Most Illinois offices ask for both.
3. Contact your county tax assessor for the property tax exemption, and the your state tax agency or Department of Veterans Affairs for the income side.
4. File before your county deadline. Many counties require you to apply once, then renew only if your rating changes.

Always confirm the current figures and deadlines with your county assessor and the Illinois Department of Veterans Affairs before you rely on them. Rules and dollar amounts change year to year.