The adjustment for residence consists of adjustments for border workers: income of U.S. residents commuting outside U.S. borders to work less income of foreign residents commuting inside U.S. borders to work plus certain Carribean seasonal workers.
Please visit http://research.stlouisfed.org/fred2/personalincome for documentation on the derivation of personal income.
Source: US. Bureau of Economic Analysis
Release: State Personal Income (Quarterly)
US. Bureau of Economic Analysis, Residence Adjustment in Illinois [ILEADJ], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/ILEADJ, February 13, 2016.