Illinois Estate Tax

If you're a resident of Illinois and leave behind more than $4 million (for deaths occurring in 2022), your estate might have to pay Illinois estate tax. The Illinois tax is different from the federal estate tax, which is imposed on estates worth more than $12.92 million (for deaths in 2023). So even if your estate isn't large enough to owe federal estate tax, it might still owe Illinois estate tax.

But it's not just state residents who might owe Illinois estate tax. If you're a nonresident but own real estate or other tangible assets (a boat or plane, for example) located in Illinois, your estate might also need to file an Illinois estate tax return.

Do You Need to File an Illinois Estate Tax Return?

If the gross estate of an Illinois resident has a value of more than $4 million, the personal representative or executor of the estate must file a state estate tax return. (Smaller estates won't need to file a return.) Your gross estate will include just about all of the property you own at your death:

• Real estate
• Bank and investment accounts—retirement and non-retirement
• Vehicles and other items of personal property
• Proceeds from any life insurance policies on your life, if you owned the policies
• Your business interests (sole proprietorship, limited liability company, or closely held corporation)
• Any property you hold in a revocable living trust

If you own assets with someone else, generally only your share will be included in your estate. In other words, if you and your spouse own your house, half of its value would be included in your estate.

Notably, your gross estate also includes non-probate assets. For example, the property you hold in a revocable living trust avoids probate, but it does not avoid estate taxes, and is counted in your gross estate.

Portability. The federal estate tax regime allows a surviving spouse to use the deceased spouse's unused portion of the exemption—a feature called "portability." However, Illinois' estate tax does not offer portability between spouses; each spouse has an exemption amount of $4 million.

Will Your Estate Owe Estate Tax?

Even if an Illinois estate tax return must be filed, it doesn't necessarily mean that the estate will owe estate tax. Your estate might be able to take certain deductions that lower the value of your estate below $4 million, in which case no estate tax will be due. These deductions include:

• Marital deductions. Property left to a surviving spouse, no matter the amount, can be deducted from the gross estate.
• Charitable deductions. Gifts to qualified public, charitable, and religious organizations can be deducted from the gross estate.
• Debts and administration expenses. Debts owed and some administration expenses (funeral costs and attorney's fees, for example) can be deducted from the gross estate.

What Is the Illinois Estate Tax Rate?

If your estate owes estate tax, how much will it actually owe? In Illinois, the tax rate currently ranges from 0.8% to 16%, depending on the size of the estate. (Compare these rates to the current federal rate of 40%.) See the Illinois Attorney General's Estate Tax publications for the exact estate tax rates in effect.

Deadlines for Filing the Illinois Estate Tax Return

If the estate might owe Illinois estate tax, your executor will have to file an Illinois estate tax return within nine months after death. Preparing the returns is usually a job for an experienced lawyer or CPA. Fees for expert help can be paid from estate funds.

For estate tax forms and instructions, visit the Illinois Attorney General's Estate Tax page.

For more on estate planning issues specific to Illinois, see Nolo's Illinois Estate Planning section.