If you serve in the military or have served, Illinois offers a property tax break for disabled veterans that grows as your disability rating rises, and at the top it can wipe out the bill on your home. Illinois draws many military families after a PCS, which is short for Permanent Change of Station, the official military move from one duty station to another, with Scott Air Force Base near Belleville and O'Fallon in the St. Louis metro area, Naval Station Great Lakes near North Chicago, and the Rock Island Arsenal in the Quad Cities. This guide explains the main rules in plain language and points you to the state's own sources. Tax law changes, so treat these figures as a starting point and confirm the current rules before you file.
How Illinois Helps Disabled Veterans With Property Taxes
Illinois gives disabled veterans a break through the Standard Homestead Exemption for Veterans with Disabilities, often shortened to SHEVD. As the Illinois Department of Revenue explains, this exemption, set in state law at 35 ILCS 200/15-169, lowers the equalized assessed value of a qualifying veteran's primary home. The U.S. Department of Veterans Affairs, known as the VA, is the federal agency that rates service-connected disabilities, and your rating decides the size of the break.
Equalized assessed value, or EAV, is the figure your county uses to calculate your property tax. It is not your home's full market value. Lowering your EAV lowers the part of your home's value that gets taxed, so a larger EAV reduction means a smaller tax bill.
The Exemption Amounts by Disability Rating
The SHEVD is tiered, so the reduction climbs with your service-connected rating. As the St. Clair County Veterans Assistance Commission and the Illinois Department of Revenue describe it, the tiers work like this:
- 30 percent to less than 50 percent disability: a $2,500 reduction in EAV
- 50 percent to less than 70 percent disability: a $5,000 reduction in EAV
- 70 percent or more disability: the home is fully exempt from property tax, as long as its equalized assessed value is less than $250,000
That top tier is the headline benefit. A veteran rated 70 percent or higher whose home has an EAV under $250,000 pays no property tax on that residence. Because the dollars a $2,500 or $5,000 EAV reduction saves depend on your local tax rate, confirm what it means for your bill with your county.
Surviving Spouses
The benefit can carry to a surviving spouse. The unmarried surviving spouse of a qualifying veteran can keep the SHEVD if the veteran was receiving it before death, and the unmarried surviving spouse of a service member killed in the line of duty may also qualify for the full exemption. Because the details depend on your situation, confirm them with your county before you count on the benefit.
How It Works With Your Local Tax Bill
Property tax in Illinois is assessed and collected at the county level, and you apply for the SHEVD with your Chief County Assessment Officer using Form PTAX-342. One detail matters: a veteran with disabilities, or the surviving spouse, must file Form PTAX-342-R each year to keep the exemption, so mark your calendar. Near Scott Air Force Base that office is in St. Clair County, and near Naval Station Great Lakes it is in Lake County.
Illinois also offers two more veteran-related breaks worth knowing about: the Specially Adapted Housing Exemption for Veterans with Disabilities, for homes adapted with federal help, and the Returning Veterans' Homestead Exemption, a one-time reduction for the year you return from active duty in an armed conflict. If you are weighing where to settle, our guide to the military bases in Illinois can help you picture the local cost of owning a home.
Military Pay and Illinois State Income Tax
Illinois has a flat individual income tax rate of 4.95 percent, but it treats military pay generously. As the Illinois Department of Revenue's filing guide for military personnel explains, the state does not tax military pay earned by service members. You report it on your federal return, then subtract it on Illinois Schedule M, so it is not taxed by Illinois.
Military retirement pay gets the same kind of protection. The federally taxed portion of pay from a government retirement plan, including a military pension, can be subtracted on your Illinois return, so Illinois does not tax your military retirement either. VA disability compensation is not part of your federal income, so the state does not tax it. Between exempt active-duty pay, subtracted retirement pay, and untaxed VA compensation, many military families owe little or no Illinois income tax on their service income. Rates and rules can change, so confirm the current details with the Department of Revenue before you file.
A Note for Military Spouses: MSRRA
If you are a military spouse, the Military Spouse Residency Relief Act, known as MSRRA, may matter to you. MSRRA is a federal law that lets a military spouse keep a home state for tax and voting purposes even after moving on military orders. You do not automatically become an Illinois resident just because your service member got orders here.
Under the related federal rules, a service member, the spouse, or both may choose the service member's home state, the spouse's home state, or the service member's permanent duty station for residency. Because that choice affects both states' taxes, confirm yours before you file. For the property tax exemption in this guide, what usually matters most is that the qualifying veteran owns and lives in the home as the primary residence.
