Illinois does not have a state estate tax

Illinois abolished its state estate tax in 2005. There is no Illinois tax on the value of property you leave behind when you die, regardless of how large your estate is. If you live in Illinois or own property there, you will not owe state estate tax to Illinois.

The federal government still has an estate tax, but it only applies to very large estates. For 2024, the federal threshold is $13.61 million per person — meaning estates smaller than that amount owe no federal tax. That threshold changes yearly and is set to drop significantly in 2026 unless Congress acts.

Some states still impose their own estate taxes or inheritance taxes (a tax on what heirs receive rather than on the estate itself). Illinois is not one of them. This is a permanent part of Illinois tax law, not a temporary exemption.

Key Takeaways

  • Illinois has no state estate tax, so your heirs will not owe Illinois tax on your estate no matter its size.
  • Federal estate tax only applies to estates over $13.61 million in 2024, and that threshold changes each year.
  • If you own property in another state, that state's estate or inheritance tax may still apply to that property.
  • Estate planning in Illinois focuses on federal tax, probate costs, and how assets transfer to heirs — not on state estate tax.

Federal estate tax still applies to very large estates

Even though Illinois has no state tax, the federal government taxes large estates. The federal estate tax exemption is the amount your estate can be worth before any federal tax is owed. In 2024, that exemption is $13.61 million per person, or $27.22 million for a married couple if both spouses plan together.

The exemption amount is not fixed. Congress set it to expire and drop to roughly $7 million per person (adjusted for inflation) on January 1, 2026, unless new legislation extends it. This means an estate worth $10 million in 2025 might owe federal tax in 2026 if the exemption drops as scheduled.

If your estate exceeds the exemption, the federal tax rate is 40 percent on the amount over the threshold. An estate worth $15 million in 2024 would owe federal tax on $1.39 million ($15 million minus $13.61 million), which equals roughly $556,000 in federal tax.

How the federal exemption works for married couples

Married couples can combine their exemptions through a process called portability. If one spouse dies and does not use their full exemption, the surviving spouse can use the unused amount in addition to their own exemption when they die.

For example, if one spouse dies in 2024 with a $5 million estate (using only $5 million of their $13.61 million exemption), the surviving spouse can use the remaining $8.61 million of the deceased spouse's exemption plus their own $13.61 million exemption, for a total of $22.22 million. This requires filing a federal estate tax return even if no tax is owed, to preserve the unused exemption.

Without portability planning, the second spouse to die loses access to the first spouse's unused exemption. An estate planning attorney can explain whether your situation requires this step.

What happens if you own property in other states

If you own real estate or other property in a state that has an estate tax or inheritance tax, that state may tax the property even if you live in Illinois. Twelve states plus Washington, D.C., currently have estate or inheritance taxes.

For example, if you own a vacation home in New York and your estate is large enough to owe federal tax, New York will also tax that property. The same applies to real estate in Pennsylvania, New Jersey, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, Oregon, Rhode Island, Vermont, or Washington, D.C.

Personal property — bank accounts, investments, vehicles — is usually taxed by your state of residence, which is Illinois. Real property (land and buildings) is taxed by the state where it is located. If you own property in multiple states, you may need to file estate tax returns in more than one state.

Probate costs in Illinois instead of estate tax

While Illinois has no estate tax, estates still go through probate — the court process that validates a will and transfers property to heirs. Probate costs money in attorney fees, court fees, and appraiser fees, typically ranging from 3 to 7 percent of the estate value depending on complexity.

An estate worth $500,000 might cost $15,000 to $35,000 to probate in Illinois, even though no estate tax is owed. Probate also takes time — usually 6 to 12 months, sometimes longer if disputes arise or property is complex.

Many people use tools like trusts, payable-on-death accounts, or joint ownership to avoid probate entirely. These strategies do not reduce taxes but do reduce probate costs and speed up the transfer of assets to heirs. An estate planning attorney can review your situation and suggest which tools fit your circumstances.

How to plan your estate in Illinois

Estate planning in Illinois focuses on three things: minimizing probate costs, ensuring assets go to the people you choose, and planning for federal tax if your estate is large. Start by listing all your assets — real estate, bank accounts, investments, retirement accounts, life insurance, and personal property of significant value.

Next, determine who you want to inherit each asset and in what order (in case someone dies before you). Then decide whether you want to use a will, a trust, or a combination. A will is simpler and cheaper but requires probate. A revocable living trust costs more upfront but avoids probate and can make managing your affairs easier if you become incapacitated.

If your estate is likely to exceed $13.61 million (or $27.22 million for a couple), or if you own property in another state with an estate tax, consult an estate planning attorney. They can structure your assets and beneficiary designations to reduce federal tax and state tax in other states. If your estate is smaller, a will and beneficiary designations on retirement accounts and life insurance may be sufficient.

Frequently Asked Questions

Do I owe Illinois estate tax if I die with a large estate?

No. Illinois has no state estate tax, so you will not owe any tax to Illinois based on the size of your estate. If your estate is large enough to owe federal tax (over $13.61 million in 2024), you will owe federal tax, but not Illinois tax.

What if I move to Illinois from a state with an estate tax?

Once you become an Illinois resident, Illinois will not tax your estate. However, if you still own property in your former state, that state may tax that specific property when you die. Your state of residence determines which state taxes most of your assets.

Can I reduce my federal estate tax in Illinois?

Yes, through strategies like trusts, gifting during your lifetime, life insurance trusts, and charitable giving. The federal exemption also shields most estates from tax. An estate planning attorney can review your specific situation and recommend strategies that fit your goals and estate size.

Is the federal estate tax exemption permanent?

No. The current exemption of $13.61 million per person is scheduled to drop to roughly $7 million per person on January 1, 2026, unless Congress extends it. This is an important reason to review your estate plan every few years or when major life changes occur.

Do I need an attorney to plan my estate in Illinois?

It depends on your situation. Simple estates with a clear will and no federal tax concerns can sometimes be handled with online tools or templates. Larger estates, property in multiple states, blended families, or federal tax concerns usually benefit from an attorney's guidance to avoid costly mistakes.