I just looked in the Schedule M instructions and Pub 101 and there is no longer the "however...' - so the IL % should be deducted (that is how I read this):
From Pub 101:
"What if I have distributions from money market trusts (mutual funds)?
If you have distributions from money market trusts (even if
the obligations are owned indirectly through owning shares
in a mutual fund), you may subtract that portion of income
received from any of the obligations that are listed in this
publication under “What if I have income from obligations
of the United States Government?” and “What income is
exempt from Illinois Income Tax by other federal statutes?”
Your distribution is exempt from Illinois Income Tax if the fund invests
exclusively in these state tax exempt obligations. The entire
amount of the distribution (income) from the fund may be subtracted.
in both exempt and nonexempt obligations. The amount
represented by the percentage of the distribution that the
mutual fund identifies as exempt may be subtracted.
in those obligations listed even if the fund does not identify
an exempt amount or percentage. You may figure your
subtraction by using a fraction. Use the amount invested by
the fund in state-exempt U.S. obligations as the numerator.
Use the fund’s total investment as the denominator. Multiply
the total distribution by the fraction.
Use the year-end amounts to figure the fraction
if the percentage ratio has remained constant throughout
the year. If the percentage ratio has not remained constant,
take the average of the ratios from the fund’s quarterly
financial reports."
