Updated October 24, 2026. Quick answer: Line 22 of the 2025 Illinois Schedule M is printed on the form as “U.S. Treasury bonds, bills, notes, savings bonds, and U.S. agency interest from federal Form 1040 or 1040-SR.” The instructions add that for mutual funds “Include the entire amount of federally taxed distributions received from mutual funds investing exclusively in U.S. government obligations.”
What this line asks
On the form, line 22 sits in the subtractions step. The label reads “U.S. Treasury bonds, bills, notes, savings bonds, and U.S. agency interest from federal Form 1040 or 1040-SR.” The instructions then open with a sentence that continues into a bulleted list in the booklet.
For the wider picture of how the state treats interest and dividends, see whether Illinois taxes dividends and interest, and for the federal side of interest see Form 1040 line 2a and 2b.
Who it applies to
The form prints one condition above lines 21 and following: “Enter the following only if included in Form IL-1040, Lines 1, 2, or 3:” The instructions for this line repeat the same idea in their first words, which tie the entry to income that is in line 1 of the IL-1040. The booklet also lists a mutual fund case and a savings bond case, and both appear in the table below.
A retiree with a taxable brokerage account or a bond fund is the usual reader here, and Illinois retirement taxes and whether Illinois taxes pensions cover the other retirement income lines.
What the instructions say to enter
| Step | What the instructions say |
|---|---|
| Start | The instructions open with a sentence about income in line 1 from these obligations. That sentence runs on into a short bulleted list in the booklet; read the whole list there before you enter an amount. |
| Mutual funds, all government | “Include the entire amount of federally taxed distributions received from mutual funds investing exclusively in U.S. government obligations.” |
| Mutual funds, mixed | “If the mutual fund invests in U.S. government obligations and non-exempt obligations, your deduction is the distribution received from the mutual fund attributable to the U.S. government obligations, as determined by the mutual fund.” |
| No percentage given | “If the mutual fund does not provide this percentage amount, multiply the total distribution by a fraction. The numerator is the amount invested by the fund in exempt U.S. government obligations, and the denominator is the fund’s total investment.” |
| Premium | “This subtraction is the amount net of any related bond premium amortization.” |
| Savings bonds | “Savings bond interest that is not included in your federal adjusted gross income is not an allowable subtraction.” |
| Pass-through shares | “Do not include your distributive share of a subtraction for U.S. government obligations from a partnership, an S corporation, a trust, or an estate on this line.” “Your distributive share of subtractions should be included on Line 14 of this schedule.” |
| Attachments | “Attach: a copy of federal Form 1040 or 1040-SR, Schedule B, if required federally, a copy of the statement from the mutual fund, and any worksheets that clearly identify your interest from U.S. obligations.” |
Where the result goes next
Line 22 is one of the lines that feed the first subtotal of the subtractions step. That subtotal is printed as “Add Lines 13 through 31 and enter the amount here and on Page 3, Line 33.” Page 3 then begins with line 33, and the schedule ends with “Add Lines 33 through 41. Enter the amount here and on Form IL-1040, Line 7.” The Schedule M instructions open by saying the schedule lets you figure “subtractions you may claim on Form IL-1040, Line 7.” See the IL-1040 line by line guide for line 7 itself.
Edition and line numbers
This page reads the 2025 Schedule M Instructions (IL-1040) and the 2025 Schedule M form from the Illinois Department of Revenue, the current file served on 2026-10-24. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Subtracting savings bond interest that never reached federal income. The instructions say “Savings bond interest that is not included in your federal adjusted gross income is not an allowable subtraction.”
- Putting a partnership or trust share on this line. The instructions say “Do not include your distributive share of a subtraction for U.S. government obligations from a partnership, an S corporation, a trust, or an estate on this line.”
- Skipping the statement from the fund. The instructions say “Attach: a copy of federal Form 1040 or 1040-SR, Schedule B, if required federally, a copy of the statement from the mutual fund, and any worksheets that clearly identify your interest from U.S. obligations.”
Related: Illinois retirement taxes, whether Illinois taxes pensions, whether Illinois taxes dividends and interest, and Form 1040 line 2a and 2b.
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Answer againSources
- 2025 Schedule M Instructions (Other Additions and Subtractions for Individuals), Illinois Department of Revenue: tax.illinois.gov
- 2025 Schedule M Other Additions and Subtractions for Individuals, Illinois Department of Revenue: tax.illinois.gov
Read from the state revenue documents linked above on October 24, 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.