What if one lives in Texas, commutes to Illinois for work, and takes a lump sum IRA distribution? Would one have to pay IL state & city tax on it? Thanks DVH

No, for two reasons:

1. If you are a TX resident then IL may only tax your wages earned while you are physically present in IL. Other income you may have such as dividends, interest, capital gains, retirement income etc are not taxable by IL.

2. IL does not tax retirement income even for IL residents, and they consider withdrawals from IRAs and 401(k) plans to be retirement income.