Illinois DOR Clarifies Foreign Pensions’ Ineligibility for State Retirement Deduction

The Illinois Department of Revenue (DOR) has issued a general information letter clarifying the ineligibility of foreign pensions for state retirement deduction. The letter states that private foreign pensions do not qualify for the Illinois deduction for retirement income under 35 ILCS 5/203(a)(2)(F) unless the pension is included in federal taxable income under Sections 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the Internal Revenue Code. This is because those Code sections generally apply only to qualified plans created or organized in the United States. [Il. Dep’t of Revenue, IT 26-0004-GIL, 04/23/26]

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