Does the State of Illinois allow me to deduct a percentage of funds income derived from U.S. government obligations?

[SteamTrain]

Yes..they do allow it for US Govt obligations contained with in a Mutual fund 

........ (they do not allow it for IL bonds within a mixed bond mutual fund)

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For your US Govt bonds in a Mutual fund...you just enter the total 1099-DIV that the Mutual fund or brokerage reported to you, and on the page after the main 1099-DIV form (in the software interview) , you check a box :

"A portion of these dividends is U.S. Government interest"

...and on the page after that you will enter the proper $$ amount. 

  You have to calculate that exact $$ amount yourself from whatever information the Mutual fund(s) provides about it.