Illinois Estate Tax Calculator

Illinois is one of only a handful of states that levy their own separate estate tax, entirely independent of the federal estate tax system. The most important distinction for Illinois residents is the exemption threshold: while the federal estate tax exempts the first $13.61 million of a taxable estate in 2024, Illinois only exempts the first $4 million. This gap means that an estate worth $8 million, for example, owes no federal estate tax whatsoever — but owes Illinois estate tax on the $4 million above the state exemption. Many families with moderately substantial estates are surprised to discover an Illinois estate tax liability they had not anticipated, particularly those who compared only to the federal threshold.

The Illinois estate tax has been in its current form since 2012, when the exemption was set at $4 million and indexed to remain there (unlike the federal exemption, which has been adjusted upward several times by legislation). Illinois does not index its exemption for inflation, which means that as asset values rise over time, more estates fall into Illinois estate tax territory even without real increases in wealth. This phenomenon — known as bracket creep applied to estate thresholds — makes proactive estate planning increasingly important for Illinois families whose net worth is approaching or above the $4 million mark.

Both federal and Illinois estate taxes can apply to the same estate simultaneously, though there is no direct dollar-for-dollar credit between the two. Federal estate tax paid is generally deductible for federal income tax purposes, but the two taxes are otherwise calculated independently using their own rates and exemptions. For very large estates — those above both the $4 million Illinois and $13.61 million federal thresholds — effective total estate tax rates can reach very high levels, making professional estate planning essential. This calculator provides a combined estimate of both tax obligations to give families a realistic picture of total estate tax exposure.

Illinois estate tax is progressive, meaning the rate increases as the taxable estate value increases above the $4 million exemption. The rates begin at 0.8% on the first portion of the taxable estate above $4 million and rise gradually to a maximum of 16% on portions of the estate above approximately $10.04 million. Unlike the flat 40% federal rate that applies above the federal exemption, Illinois uses a graduated bracket structure that results in effective tax rates between these extremes for most taxable estates. The graduated structure means that an estate at $5 million faces a very different effective rate than an estate at $15 million.

The exact bracket boundaries and rates for Illinois estate tax are based on a table incorporated into the Illinois estate tax statute, which references the estate tax rates that existed under federal law in 2001 — before the significant federal estate tax changes of the 2000s. This historical reference creates an occasionally confusing structure for practitioners, but the practical effect is a series of progressive rates that increase as the estate grows larger. For planning purposes, the key takeaway is that Illinois estate tax is most impactful between $4 million and $10 million, where the marginal rates are climbing steeply, and becomes most burdensome above $10 million where rates approach the 16% maximum.

Comparing Illinois estate tax rates to those of other states that impose estate taxes reveals that Illinois sits toward the higher end of the state estate tax spectrum. States like Massachusetts and Oregon also have $1 million exemptions with rates up to 16%, while states like Washington have exemptions of $2.193 million and rates up to 20%. Other states have no estate tax at all. For wealthy Illinois residents considering a change of domicile, relocating to a state with no estate tax before death can eliminate the Illinois estate tax entirely — though the legal requirements for establishing true domicile in a new state must be carefully satisfied, and the decision involves many factors beyond tax savings alone.

The Illinois taxable estate is broadly defined and generally mirrors the federal gross estate concept with important state-specific adjustments. The gross estate includes virtually all assets the decedent owned or had an interest in at the time of death: real property, bank accounts, investment accounts, retirement accounts (in some cases), business interests, vehicles, personal property, and any property over which the decedent held a general power of appointment. Life insurance proceeds are included in the gross estate if the decedent owned the policy — that is, held what the tax code calls 'incidents of ownership' — regardless of who is named as the beneficiary.

Certain deductions reduce the gross estate to arrive at the taxable estate. The most significant deduction is the unlimited marital deduction, which allows all assets passing directly to a surviving spouse to pass free of both Illinois and federal estate tax. This deduction defers rather than permanently eliminates the estate tax — the tax becomes due when the surviving spouse's estate is eventually settled. Other deductions include charitable bequests (assets left to qualifying charitable organizations pass free of estate tax), funeral expenses, debts of the decedent, estate administration expenses, and mortgages on included real property. The net taxable estate after all deductions is what the progressive Illinois rates are applied to, above the $4 million exemption.

Jointly held property presents particular complexity in Illinois estate tax calculations. Property held jointly with right of survivorship — such as a jointly titled home or joint bank account between spouses — passes outside of probate to the surviving joint tenant, but the decedent's share of the jointly held property is still included in the taxable estate for estate tax purposes. Community property, while not a concept that Illinois uses for property acquired during marriage, can become relevant for couples who have moved from community property states. Assets held in revocable living trusts are also included in the taxable estate, because the decedent retained control over them during life. Only properly structured irrevocable trusts can move assets outside the estate.

One of the most important differences between federal and Illinois estate tax planning is the concept of portability. At the federal level, the Tax Relief Act of 2010 introduced portability, which allows a surviving spouse to claim any unused portion of the deceased spouse's federal estate tax exemption. If Spouse A dies with a $13.61 million federal exemption and leaves a taxable estate of $8 million — using $8 million of the exemption — the remaining $5.61 million of unused exemption can be transferred to Spouse B through a timely filed estate tax return (Form 706) electing portability. This can effectively double the exemption available at Spouse B's death.

Illinois does not offer portability. This is a critical planning consideration for married Illinois couples, because without portability, the first spouse to die may effectively waste their $4 million Illinois exemption if all assets pass outright to the surviving spouse via the marital deduction. When the surviving spouse later dies with a larger combined estate, only their own $4 million Illinois exemption is available — not the deceased spouse's unused exemption. This means a combined estate of $8 million could face Illinois estate tax on $4 million at the survivor's death, whereas with portability (or proper trust planning), both exemptions could have been used, resulting in no Illinois estate tax at all.

The traditional estate planning response to the absence of portability in Illinois is the credit shelter trust (also called a bypass trust or family trust). When the first spouse dies, assets up to the Illinois exemption ($4 million) are directed into an irrevocable credit shelter trust rather than passing outright to the surviving spouse. These trust assets are available for the benefit of the surviving spouse (and often the couple's children) but are not included in the surviving spouse's taxable estate. This effectively uses both spouses' Illinois exemptions — $4 million at the first death via the trust, and $4 million at the second death via the surviving spouse's own exemption — potentially sheltering $8 million from Illinois estate tax entirely.

Annual gifting is one of the most accessible strategies for reducing an Illinois taxable estate over time. The federal annual gift tax exclusion allows any individual to give up to $18,000 per recipient per year (as of 2024) without incurring federal gift tax and without reducing the federal or Illinois lifetime gift tax exemption. A married couple can give up to $36,000 per recipient per year through gift splitting. While Illinois does not have its own gift tax, lifetime gifts effectively reduce the Illinois taxable estate — because assets given away before death are not included in the estate. Consistent annual gifting to children and grandchildren over many years can meaningfully reduce estate size.

Irrevocable life insurance trusts (ILITs) are a powerful tool for removing life insurance from the Illinois taxable estate while still providing liquidity for estate tax payments and family support. If you currently own a life insurance policy, transferring ownership to an ILIT removes the death benefit from your taxable estate — provided you survive for at least three years after the transfer. A newly purchased policy placed directly into an ILIT is excluded from the estate immediately. The ILIT then uses the death benefit to provide cash that can be used to pay estate taxes (through a loan to the estate or purchase of estate assets) without those funds themselves becoming subject to estate tax.

Charitable giving strategies offer both income tax benefits during life and estate tax reductions at death. Assets left to qualifying charities are deductible from the gross estate and reduce the Illinois taxable estate dollar for dollar. Charitable remainder trusts (CRTs) and charitable lead trusts (CLTs) allow more sophisticated arrangements that provide income to the family during a term and the remainder to charity (or vice versa), creating partial estate deductions and income streams simultaneously. For Illinois families with estates significantly above the $4 million threshold and philanthropic intentions, integrating charitable planning with broader estate tax reduction strategies can align financial goals with legacy objectives while substantially reducing the combined Illinois and federal estate tax bill.