Updated October 19, 2026. Quick answer: Line 5 of the Illinois IL-1040 is where federally taxed Social Security and certain retirement plan income is subtracted from the income carried over from your federal return. The instructions list the qualifying plans by their federal Form 1040 lines. Line 5 feeds the total of your subtractions on line 8, which is then taken from line 4 to reach Illinois base income on line 9.
More on public pension systems, topic by topic: Illinois SERS returning to work.
What this form does
IL-1040 line 5 sits in Step 3 of the return, which is headed Step 3, Base Income. The line is worded “Social Security benefits and certain retirement plan income if included in Line 1.” The return’s own page 2 tells retirees where to look: “you may be able to subtract it on Line 5.” Illinois retirement taxes covers how Illinois treats retirement income at the state level.
The Schedule M instructions confirm that retirement income does not go through that schedule: “Eligible retirement income should be subtracted on Form IL-1040, Line 5.” Schedule M is described there as the place that “allows you to figure the total amount of additions you must include on Form IL-1040, Individual Income Tax Return, Line 3 and subtractions you may claim on Form IL-1040, Line 7.”
Who it applies to
The general instructions speak to retirees directly: “a retired Illinois resident who filed a federal return, you must file Form IL-1040.” They continue: “However, certain types of retirement income (e.g., pension, Social Security, railroad retirement, governmental deferred compensation) may be subtracted from your Illinois income.”
The line 5 instructions set the scope as income that is “federally taxed” and included in your Illinois income: “Enter the amount of federally taxed Social Security and retirement income included in your adjusted gross income on Form IL-1040, Line 1 that you received from” the sources in the bullet list shown in the table below.
The lines, one by one
| Line | What the form says |
|---|---|
| Form, line 5 | “Social Security benefits and certain retirement plan income if included in Line 1.” |
| Form, line 5 (federal lines) | “(Generally on fed. Forms 1040/1040-SR, Lines 4b, 5b, and 6b).” The form adds “Attach fed. Form 1040/1040-SR.” |
| Instructions, Line 5 heading | “Social Security benefits and certain retirement plans” |
| Instructions, Line 5 | “Enter the amount of federally taxed Social Security and retirement income included in your adjusted gross income on Form IL-1040, Line 1 that you received from” |
| Bullet 1 | “qualified employee benefit plans (including railroad retirement and 401(K) plans) and Individual Retirement Accounts or self-employed retirement plans reported on federal Form 1040 or 1040-SR, Line 4b and 5b.” |
| Bullet 2 | “Social Security and railroad retirement benefits reported on federal Form 1040 or 1040-SR, Line 6b.” |
| Bullet 3 | “government retirement and government disability plans and group term life insurance premiums paid by a qualified retirement plan reported as wages on your federal Form 1040 or 1040-SR, Line 1z.” |
| Bullet 4 | “state or local government deferred compensation plans reported on federal Form 1040 or 1040-SR, Line 1z and 5b.” |
| Bullet 5 | “certain capital gains on employer securities reported on federal Form 1040 or 1040-SR, Line 7a.” |
| Instructions, note | “should not be included on Line 5.” That note covers “Your beneficiary share of payments from certain retirement plans and retirement payments to retired partners reported on Schedule K-1-T” and the matching Schedule K-1-P payments; it adds “For more information, see the Schedule M Instructions.” |
| Instructions, detail | “See Publication 120 for detailed information about what retirement income you may subtract.” |
| Instructions, attachments | “Attach: Federal Form 1040 or 1040-SR, Page 1 and Schedule 1, and any W-2 and 1099 forms.” |
| Line 7 (beside it) | “Other subtractions. Attach Sch. M.” |
| Line 8 | “Add Lines 5, 6, and 7. This is the total of your subtractions.” |
| Line 9 | “Illinois base income. Subtract Line 8 from Line 4.” |
The bullets are tied to specific federal Form 1040 lines, so it helps to have your federal return open. See Form 1040 line 5a and 5b and Form 1040 line 4a and 4b for how those federal lines are reported, and 1099-R boxes explained for the payer form behind them.
One point the two instruction sets do not word the same way is retirement payments reported on a Schedule K-1-P or K-1-T. The line 5 note says they “should not be included on” line 5, while the Schedule M instructions for subtractions say “Do include these amounts on Form IL-1040, Line 5.” Read both passages on your own forms, and ask the department or a preparer which applies to your payment, before you rely on either.
Where the result goes next
Line 5 is added with lines 6 and 7: “Add Lines 5, 6, and 7. This is the total of your subtractions.” That total is then used on line 9: “Illinois base income. Subtract Line 8 from Line 4.” The line 5 instructions also say to attach support: “Attach: Federal Form 1040 or 1040-SR, Page 1 and Schedule 1, and any W-2 and 1099 forms.”
Edition and line numbers
This page reads the 2025 Form IL-1040 and its instructions, with the 2025 Schedule M IL-1040 Instructions for tax year 2025, the current file the Illinois Department of Revenue served on 2026-10-19. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Entering retirement income on Schedule M. The Schedule M instructions say “Eligible retirement income should be subtracted on Form IL-1040, Line 5.”
- Subtracting an item the schedules do not list. The Schedule M instructions state “You may not subtract anything that is not listed on Schedule M.” so check each item against the line 5 list first.
- Leaving out the supporting pages. The line 5 instructions say “Attach: Federal Form 1040 or 1040-SR, Page 1 and Schedule 1, and any W-2 and 1099 forms.”
Related: Illinois retirement taxes, whether Illinois taxes pensions, Illinois 401(k) and IRA withdrawals, Form 1040 line 5a and 5b, and 1099-R boxes explained.
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Answer againSources
- 2025 Form IL-1040, Individual Income Tax Return, Illinois Department of Revenue: tax.illinois.gov
- 2025 Form IL-1040 Instructions, Illinois Department of Revenue: tax.illinois.gov
- 2025 Schedule M IL-1040 Instructions, Illinois Department of Revenue: tax.illinois.gov
Read from the state revenue documents linked above on October 19, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.