Unemployment compensation included in your federal adjusted gross income is taxable to Illinois if
- you earned it while you were an Illinois resident or
- you received it from the Illinois Department of Employment Security as a nonresident.
Note: Railroad Unemployment is the only type of unemployment income that is not taxed by Illinois. Refer to Schedule M, Line 37 Instructions. Do not claim any other type of unemployment income on Schedule M, Line 37.
Important: The federally enacted American Rescue Plan Act of 2021 includes a retroactive provision making the first $10,200 per taxpayer of 2020 unemployment benefits nontaxable for individuals with modified federal Adjusted Gross Income (AGI) of less than $150,000. This exclusion is included in the AGI with which the IL-1040 begins and is not added back to the Illinois Taxable Income. For more Illinois-specific information, see American Rescue Plan Act of 2021, Nontaxable Unemployment Benefits.