Illinois does not tax government disability plans. Disability retirement pay you receive as a pension, annuity or similar allowance for an injury or sickness that resulted from active service is left out of your taxable income. The same treatment covers VA disability compensation and pension payments to veterans or their families, grants for a home designed for wheelchair living, grants for a vehicle if you lost your sight or the use of a limb, and benefits under a dependent care assistance program.
There is nothing to apply for. Leave these payments out of the income you report, and keep your VA award letter with your tax records.
Your VA award letter showing the payments and what they are for.
