Illinois State Tax Treatment of Domestic Partner Health Coverage

The Illinois Religious Freedom Protection and Civil Union Act became effective June 1, 2011. The Illinois Act provides for civil unions between same-sex or opposite-sex couples to have the same rights, protections and benefits of spouses.

The Illinois Department of Revenue confirms that there is no change for state income tax purposes. Illinois will continue to follow the federal tax rules. As a result, civil union partners in Illinois will have imputed income for purposes of state income tax (unless the partner is certified as a tax dependent). There should be no changes to payroll systems. The result is somewhat unexpected considering the breadth of the Illinois civil union law, but the Department explained that the Illinois tax code incorporates the federal tax code. Illinois Department of Revenue published an announcement that confirms Illinois state income tax does not recognize civil unions.