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The Illinois estate tax rate is graduated and goes up to 16%. However, it is only applied on estates worth more than $4 million. So if you live in the Prairie State and are thinking about estate planning, you should learn about this all-important tax law. Despite the Illinois estate tax, make sure you also understand the federal estate tax, which has a much higher exemption of $15 million in 2026.
A financial advisor can assist with your estate planning as well as any other long-term goals.
Illinois Estate Tax Exemption
The estate tax threshold for Illinois is $4 million. This means that if you die and your total estate is worth less than $4 million, the estate won’t owe anything to the state of Illinois. If your estate is worth more than $4 million, though, there is a progressive estate tax rate for all wealth your estate will have to pay before money can be dispersed to your heirs.
Unlike some other states, the Illinois exemption is not portable between spouses, so when both people in a married couple have died the exemption is still $4 million.
Illinois Estate Tax Rate
The estate tax rate for Illinois is graduated and the top rate is 16%. Remember that in Illinois, you pay taxes on the entire estate if it is above the $4 million threshold.
Find your taxable estate bracket in the chart below. The second column, Base Taxes Paid, shows what you owe on money that falls below your bracket. Then figure out how much of your estate falls above the lower limit of your bracket. Multiply that number by the marginal rate, add it to the base rate and you’ll know your estate tax burden. In addition, the chart below shows no taxes owed on the first $40,000 of taxable income because of a system of tax credits from the state.
Illinois Estate Tax Rates 1
| Taxable Estate* | Base Taxes Paid | Marginal Rate | Rate Threshold** |
|---|---|---|---|
| $1 – $40,000 | $0 | 0% | $0 |
| $40,000 – $90,000 | $0 | 0.8% | $40,000 |
| $90,000 – $140,000 | $400 | 1.6% | $90,000 |
| $140,000 – $240,000 | $1,200 | 2.4% | $140,000 |
| $240,000 – $440,000 | $3,600 | 3.2% | $240,000 |
| $440,000 – $640,000 | $10,000 | 4.0% | $440,000 |
| $640,000 – $840,000 | $18,000 | 4.8% | $640,000 |
| $840,000 – $1.04 million | $27,600 | 5.6% | $840,000 |
| $1.04 million – $1.54 million | $38,800 | 6.4% | $1.04 million |
| $1.54 million – $2.04 million | $70,800 | 7.2% | $1.54 million |
| $2.04 million – $2.54 million | $106,800 | 8.0% | $2.04 million |
| $2.54 million – $3.04 million | $146,800 | 8.8% | $2.54 million |
| $3.04 million – $3.54 million | $190,800 | 9.6% | $3.04 million |
| $3.54 million – $4.04 million | $238,800 | 10.4% | $3.54 million |
| $4.04 million – $5.04 million | $290,800 | 11.2% | $4.04 million |
| $5.04 million – $6.04 million | $402,800 | 12.0% | $5.04 million |
| $6.04 million – $7.04 million | $522,800 | 12.8% | $6.04 million |
| $7.04 million – $8.04 million | $650,800 | 13.6% | $7.04 million |
| $8.04 million – $9.04 million | $786,800 | 14.4% | $8.04 million |
| $9.04 million – $10.04 million | $903,800 | 15.2% | $9.04 million |
| $10.04 million and up | $1,082,800 | 16.0% | $10.04 million |
*The taxable estate is the total above the 2026 exemption of $4 million.
**The rate threshold is the point at which the marginal estate tax rate goes into effect.
What Is the Estate Tax?
State and federal governments levy taxes on the estates of wealthy people after they have died, but before the estate pays money to their heirs. This has led some to call it the “death tax.”
Don’t confuse the estate tax with the inheritance tax, a separate tax some states levy on recipients of an inheritance.
Illinois Inheritance Tax
There is no inheritance tax in Illinois. The inheritance tax of other states could apply to you, though. In Kentucky, for instance, the heirs must pay the inheritance tax on any property inherited in the state even if they don’t live there.
Illinois Gift Tax
There is no gift tax in Illinois. There is a federal gift tax that applies on gifts worth more than $19,000 in 2026 and 2025. Any gift worth more than that given to one person in a year counts against the 2026 lifetime gift tax exemption of $15 million.
Illinois Estate Tax for Married Couples
The Illinois estate tax is not automatically portable between married couples. When one spouse dies, all wealth transfers to the surviving spouse avoid the estate tax. When the second spouse dies, though, the estate can only use one spouse’s exemption.
Some couples use legal trusts to decrease the estate tax burden. If you think your estate will be subject to the estate tax, you should consider speaking to a financial advisor or an estate planning attorney to find how to use a trust.
Federal Estate Tax
There is also a federal estate tax you may be subject to, but it has a much higher exemption. The federal estate tax exemption is $15 million in 2026 and $13.99 million in 2025. It is portable between spouses, meaning if the right legal steps are taken, a married couple can protect up to $30 million in 2026.
If an estate exceeds that amount, the top tax rate is 40%. A full chart of federal estate tax rates is below. You can use the same method described in the Illinois Estate Tax section to figure out your federal estate tax burden.
Federal Estate Tax Rates 2
| Taxable Estate* | Base Taxes Paid | Marginal Rate | Rate Threshold** |
|---|---|---|---|
| $1 – $10,000 | $0 | 18% | $1 |
| $10,000 – $20,000 | $1,800 | 20% | $10,000 |
| $20,000 – $40,000 | $3,800 | 22% | $20,000 |
| $40,000 – $60,000 | $8,200 | 24% | $40,000 |
| $60,000 – $80,000 | $13,000 | 26% | $60,000 |
| $80,000 – $100,000 | $18,200 | 28% | $80,000 |
| $100,000 – $150,000 | $23,800 | 30% | $100,000 |
| $150,000 – $250,000 | $38,800 | 32% | $150,000 |
| $250,000 – $500,000 | $70,800 | 34% | $250,000 |
| $500,000 – $750,000 | $155,800 | 37% | $500,000 |
| $750,000 – $1 million | $248,300 | 39% | $750,000 |
| Over $1 million | $345,800 | 40% | $1 million |
*The taxable estate is the total above the 2026 exemption of $15 million.
**The rate threshold is the point at which the marginal estate tax rate goes into effect.
How a Financial Advisor Can Help With Illinois Estate Tax Planning
Illinois taxes the entire estate once it crosses the $4 million threshold, and the exemption is not portable between spouses, which means many married couples face a larger combined tax exposure than they expect. A financial advisor working alongside an estate planning attorney can help you assess your situation and put strategies in place before the tax applies.
Assessing Whether Your Estate Crosses the Illinois Threshold
- What an advisor can do: Compile a complete inventory of your assets, including retirement accounts, real estate equity and life insurance proceeds, and project how your estate value may grow over time to determine whether you are likely to owe Illinois estate tax.
- Example: A married couple in suburban Chicago has a combined estate of $3.5 million today. An advisor projects that continued home appreciation and retirement account growth could push their estate above $4 million within a decade, prompting an earlier conversation about trust planning than the couple initially expected to need.
Planning Around the Lack of Spousal Portability
- What an advisor can do: Work with an estate attorney to evaluate trust structures, such as a bypass trust, that allow both spouses to use their own $4 million exemption rather than relying on a single exemption after the second spouse’s death.
- Example: A couple in Springfield has a combined estate of $7 million. Without planning, the full amount above $4 million would be taxed upon the second spouse’s death, since Illinois does not allow the unused exemption to transfer. An advisor recommends a trust structure that preserves both exemptions, reducing the taxable estate by up to $4 million.
Coordinating Lifetime Gifting to Reduce Taxable Estate Value
- What an advisor can do: Build a gifting plan using the federal annual exclusion of $19,000 per recipient in 2026, transferring assets out of the taxable estate over time without using the federal lifetime exemption.
- Example: A business owner in Naperville has an estate valued at $4.8 million, putting them above the Illinois threshold. An advisor models a gifting strategy that transfers business interests to adult children over several years, gradually reducing the taxable estate below $4 million while the owner retains sufficient assets for retirement.
Modeling the Combined Illinois and Federal Tax Exposure
- What an advisor can do: Calculate how an estate is taxed at both the Illinois and federal level, since an estate above $4 million may owe Illinois tax while remaining well below the $15 million federal exemption, and project the combined impact under each scenario.
- Example: A retiree in Peoria has an estate worth $5 million. An advisor calculates that while no federal estate tax applies, Illinois tax on the amount above $4 million results in a meaningful state tax bill, and presents options such as charitable giving or trust planning to reduce that specific exposure.
Reviewing the Plan as Asset Values Change
- What an advisor can do: Provide periodic projections of estate value and flag when a previously adequate plan needs to be revisited as real estate, retirement accounts or business interests appreciate.
- Example: A homeowner in Rockford has an estate valued at $3.2 million, comfortably below the Illinois threshold. Over the following years, investment growth and rising property values push the estate to $4.3 million. An advisor conducting an annual review identifies the shift and recommends revisiting gifting or trust strategies before the estate crosses further into taxable territory.
Bottom Line
Illinois is a very tax-friendly state for retirement. Almost all retirement income in Illinois is tax-free, including pension plans, retirement plans and Social Security. For non-retirees, calculating Illinois income tax is fairly easy as the state has a flat tax of 4.95% that applies to everyone, regardless of income. You can figure out what your take home pay will be using our Illinois paycheck calculator. 3 Property taxes in Illinois are very burdensome, with an effective rate of 1.88%, among the highest in the U.S. 4
Estate Planning Tips
- A financial advisor can help you properly plan out your estate and make sure you know what taxes you may be on the hook for. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Contrary to popular belief, establishing a trust is not just for the uber-wealthy. A trust can be a useful tool for planning your estate, so you might want to consider it.
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Article Sources
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- https://illinoisattorneygeneral.gov/application/estate-tax-calculator/taxtable.htm. Accessed 2 July 2026.
- “Instructions for Form 706 (09/2025) | Internal Revenue Service.” Home, Sept. 1, 2025, https://www.irs.gov/instructions/i706.
- “Income Tax Rates.” Agencies Services, https://tax.illinois.gov/research/taxrates/income.html. Accessed July 2, 2026.
- York, Author. “Taxes in Illinois.” Tax Foundation, 30 Oct. 2025, https://taxfoundation.org/location/illinois/.