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Income Exempt from Tax
Income in the form of education loan repayments made
for primary care physicians who agree to practice in married filing jointly) to qualified ABLE accounts.
designated shortage areas for a specified period of time
What income is not exempt from Illinois
under the terms of the Family Practice Residency Act.
Income Tax?
Income earned by nuclear decommissioning trusts
established pursuant to Section 8-508.1 of the Public The following types of income are not exempt from Illinois
Utilities Act. The terms “decommissioning trust” or “trust” Income Tax:
mean a fiduciary account in a bank or other financial Income from securities known as Government National
institution established to hold the decommissioning funds Mortgage Association (GNMA) “Pass-Through Securities”
provided by the Public Utilities Act for the eventual purpose or GNMA “Mortgage-Backed Securities” and income
of paying decommissioning costs, which shall be separate from debentures, notes, and bonds issued by the
from all other accounts and assets of the public utility Federal National Mortgage Association (FNMA) including
establishing the trust. mortgage-backed bonds
Reparations or other amounts received as a victim Interest from Federal Home Loan Mortgage Corporation
of persecution for racial or religious reasons by Nazi (FHLMC) securities
Germany or any other Axis regime that are included in
your federal taxable income. Also include any reparations Daily Investment Deposit Accounts (DID) under Federal
or other amounts received as an heir of such victim that Home Loan Banks
are included in your federal taxable income. Accumulated interest on Internal Revenue Service tax
Income earned from college savings programs under refunds
Section 55 of the Illinois Prepaid Tuition Act or Section Income from U.S. securities acquired by a taxpayer under
16.5 of the State Treasurer Act, except distributions a repurchase agreement (repo) with a bank or similar
that are not used for tuition, fees, school supplies, financial organization. Such agreements are to be treated
and other qualified expenses. These programs are as loans.
commonly known as the Bright Start and Bright Directions
College Savings Programs and the College Illinois For example: You loan money to the bank and receive
prepaid tuition program. For tax years beginning on or interest in return. The securities subject to repurchase by
after January 1, 2007, this exemption also applies to any the bank serve as collateral for the loan. The bank remains
plan qualifying under Section 529 of the Internal Revenue legally entitled to receive the interest payments from the
Code that complies with the disclosure requirements of the issuing authority and remains the actual owner of the
College Savings Plan Network and that annually informs securities. Any tax benefit attributable to the exempt income
Illinois residents about in-state programs. paid by the issuing authority accrues to the bank and not to
you.
For tax years ending on or after December 31,
2002, and before December 31, 2005, contributions to the
Bright Start program under the State Treasurer Act are
deductible.
How do I figure the amount of exempt
For tax years ending on or after December 31, 2005, up to
income I am entitled to subtract on my
$10,000 in contributions ($20,000 if married filing jointly)
to the Bright Start or Bright Directions programs and the Illinois Income Tax Return?
College Illinois prepaid tuition fund are deductible.
First, you must be sure that the item of income is included in
Income earned from qualified ABLE accounts under your total income as shown on your Illinois Income Tax return.
Section 16.6 of the State Treasurer Act for tax years Most items are automatically included in your total Illinois
beginning on or after January 1, 2018 and prior to income because they are included in your federal gross
January 1, 2023. This is limited to a maximum of $10,000 income, which is a part of your total Illinois income.
and exempts amounts excluded from gross income
For example: Interest on U.S. Treasury notes is included in
under Section 529(c)(3)(C)(i) or Section 529A(c)(1)
your federal gross income and is, therefore, included in your
(C) of the Internal Revenue Code. Contributions made
total income on your Illinois Income Tax return.
by an employer on behalf of an employee, or matching
contributions made by an employee, shall be treated as Other federally tax-exempt items that were not included on
made by the employee. your federal return must be included as an addition on your
Illinois Income Tax return when figuring your total Illinois
The credit is limited to $10,000 in contributions ($20,000 if
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