Illinois Estate Tax and Federal Estate Tax

Illinois is one of a small group of states that charges its own estate tax on top of the federal one. The Illinois exclusion is $4,000,000. The federal exclusion for a 2026 death is $15,000,000. That $11,000,000 gap is the whole story: an Illinois family can owe Springfield a six-figure tax bill and owe the IRS nothing at all. To check a specific estate against both thresholds, run the numbers in the Illinois estate tax calculator.

Most pages about "Illinois death tax" get this backwards. They open with the federal rules, mention the state tax as a footnote, or confuse the estate tax with an inheritance tax Illinois has not collected since 1982. This guide runs the other direction, because the state tax is the one that actually reaches Illinois families.

Illinois Charges Its Own Estate Tax

The Illinois Estate and Generation-Skipping Transfer Tax Act imposes a tax on every taxable transfer of property that has a tax situs in Illinois. That is 35 ILCS 405/3(a), and it applies to residents and to nonresidents who own Illinois property.

The exclusion sits in the definition of "state tax credit" at 35 ILCS 405/2. The statute sets an exclusion amount of $4,000,000 for persons dying on or after January 1, 2013. Three things about that number matter more than the number itself:

• It has not moved since 2013. The statute names a flat dollar figure with no inflation adjustment, so thirteen years of Chicago-area property appreciation have pulled more estates over the line every year.
• It is a threshold, not a credit. The Attorney General's instruction sheet says so directly. Clearing $4,000,000 does not exempt the first $4,000,000 and tax the rest at a modest rate. It opens the door to a calculation that reaches back into the whole estate.
• It does not transfer to a surviving spouse. The Attorney General's fact sheet states that portability and carryover of an unused exemption do not apply to the Illinois estate tax. A couple who does nothing loses the first spouse's $4,000,000.

Here is how Illinois compares to the federal system for a death in 2026.

What Goes Into the $4,000,000

The trigger is gross value plus adjusted taxable gifts, not the probate estate. The Attorney General's instruction sheet puts it plainly: if an estate's gross value exceeds $4,000,000 after adding adjusted taxable gifts, an Illinois Form 700 must be filed whether or not the IRS wants a federal return.

That counts a lot of property people forget:

• Real estate, including farmland, a rental, and the family home
• Life insurance on a policy the decedent owned, at full death benefit
• Retirement accounts, including an IRA, a 401(k), and a 403(b)
• Everything inside a revocable living trust
• The decedent's share of jointly held property
• Closely held business and farm interests
• Taxable gifts made during life, added back

A retired couple in DuPage County with a paid-off house, a farm interest downstate, two IRAs, and a $1,000,000 term policy can clear $4,000,000 without ever feeling wealthy. None of that property passes through probate, and all of it counts here.

What the Illinois Estate Tax Actually Costs

Illinois does not publish a plain rate table. Under 35 ILCS 405/3(c) the tax equals the "state tax credit" defined in Section 2, which recreates the old federal credit for state death taxes as that credit stood on December 31, 2001, then recomputes it against only the $4,000,000 Illinois exclusion. The Attorney General calls it an interrelated calculation and posts an online calculator for it.

The published examples show the shape better than any formula.

Read the middle row and the fourth row together. The tax opens gently and then climbs hard. One hundred dollars over the line costs $28. One million dollars over the line costs $285,714, which works out to roughly 29 cents of Illinois tax on each dollar above $4,000,000. There is no cliff at the threshold, but there is a steep ramp right behind it.

Notice what the federal column says in every row. Zero. That is the point of this page.

Illinois Has No Portability, So the QTIP Election Does the Work

Federal law lets a widow or widower add a late spouse's unused exclusion to their own. Illinois refuses. The Attorney General's fact sheet ends its computation examples with a flat statement that portability and carryover of the unused federal exemption do not apply to the Illinois estate tax.

Illinois offers a different tool instead, and it is written into the statute at 35 ILCS 405/2(b-1). The person filing the Illinois return may elect a marital deduction for qualified terminable interest property that is separate and independent of any federal QTIP election. That word "independent" is what couples plan around, because it lets an Illinois election stand on its own without disturbing the federal return.

Let's break down why that matters. A couple can shelter the first $4,000,000 at the first death using a credit shelter trust, then make an Illinois-only QTIP election on everything above that. The first estate owes Illinois nothing. The QTIP property lands in the survivor's estate, where the survivor's own $4,000,000 exclusion applies. The couple gets two Illinois exclusions instead of one, and the federal side stays untouched because the Illinois election stands on its own.

Two conditions ride along with the election:

• It must be made on a timely filed Illinois return by checking the election box, entering the dollar amount, and giving the surviving spouse's Social Security number. File late and the election is gone.
• The statute bars a trustee from holding non-income-producing assets in QTIP property for more than a reasonable time without the surviving spouse's consent.

Civil union partners get this too. The Attorney General applies the Illinois Religious Freedom Protection and Civil Union Act (750 ILCS 75) to the estate tax, so partners in a civil union entered on or after June 1, 2011 claim the Illinois marital deduction and the Illinois QTIP election on the same terms as a married couple. Federal law does not treat that union as a marriage, so those estates file a Form 700, a pro forma Form 706 showing the marital deduction as if federal law allowed it, and a copy of any Form 706 actually filed with the IRS.

None of this happens by accident. A married couple whose combined property runs past $4,000,000 needs the trust language and the election in place before the first death, which is the planning that a revocable living trust and the rest of the probate avoidance toolkit exists to support.

Filing Illinois Form 700

The Illinois Attorney General administers this tax, not the Department of Revenue and not the county. The return is Form 700.

When it is due. Under 35 ILCS 405/6(a), the Illinois return and payment follow the federal due dates, including extensions. That puts the deadline nine months after the date of death. The Attorney General accepts a federal extension and also grants its own on Form 700-EXT, which should be filed within nine months of the death.

Where the return goes. The original Form 700 travels by mail, courier, or hand delivery to one of two Attorney General offices:

• Cook, DuPage, Lake, and McHenry counties: Revenue Litigation Bureau, Estate Tax Section, 115 S. LaSalle St., Chicago, Illinois 60603
• All other counties: Revenue Litigation Bureau, Estate Tax Section, 500 South Second Street, Springfield, Illinois 62701

Where the money goes. Since July 1, 2012, the tax has been paid directly to the State Treasurer rather than a county treasurer, under 35 ILCS 405/6(e)(3). Use the Illinois State Treasurer Estate Tax Payment Form.

What to attach. Send Form 700 with a Form 706 and its schedules, appraisals, wills, and trusts. An estate that owes no federal tax and does not want to prepare a Form 706 may present the same information in another format as long as nothing is left out.

The return is confidential. Section 6(f) bars the Attorney General, the State Treasurer, and their staff from disclosing its contents except in a proceeding under the Act. An executor working through the rest of the estate will find the deadline sitting alongside the other duties covered in the Illinois executor duties guide.

Property Outside Illinois, and Nonresidents Who Own Illinois Land

Illinois taxes only the share of an estate with a tax situs here, and it gets there through apportionment rather than a carve-out.

Section 3(c) reduces the tax by the percentage that non-Illinois property bears to total property. The Attorney General's method: calculate a preliminary tax as if every asset sat in Illinois, then multiply by the ratio of Illinois assets to total assets. Any estate with less than 100% of its property in Illinois files the Form 700 Addendum.

Look again at the $5,000,000 estate split evenly between Illinois and Florida. The tax drops from $285,714 to $142,857. The Attorney General's own note on that example is worth repeating: the Illinois half is still taxed even though Florida imposes no state estate tax. Moving half the money to a no-tax state cuts the Illinois bill in half and does not erase it.

This runs the other way too. A Florida or Wisconsin resident who owns an Illinois farm or a Chicago condo can owe Illinois estate tax on that property, and the family may also face an Illinois ancillary probate to clear the title.

The Federal Estate Tax in 2026

Now the federal layer, which reaches far fewer Illinois families.

The IRS set the federal exclusion at $15,000,000 for estates of decedents dying in 2026, up from $13,990,000 for 2025 deaths. The top rate on anything above the exclusion is 40%. Two deductions wipe out most of what is left below it: an unlimited marital deduction for property passing outright to a surviving spouse who is a U.S. citizen, and an unlimited charitable deduction.

Older estate plans often warned that the exclusion would fall by roughly half at the start of 2026 under a sunset written into the 2017 tax law. That sunset did not happen. If a plan still contains formula clauses or a gifting program built around a much smaller exclusion, have a lawyer read it, because the strategy may now push property in the wrong direction.

Form 706 and portability. File a federal return when the gross estate plus adjusted taxable gifts exceeds the exclusion, when the estate allocates generation-skipping transfers, or when a surviving spouse wants the deceased spousal unused exclusion. That last one is the trap. Portability is never automatic. It takes a Form 706 even when the estate owes nothing and sits far below $15,000,000. Missing the nine-month date does not always end it: an estate that had no filing requirement of its own may still elect portability under Revenue Procedure 2022-32 by filing a complete Form 706 on or before the fifth anniversary of the death, marked "FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)." Form 4768 asks for more time to file, to pay, or both, and an extension of time to file does not extend the time to pay.

Lifetime gifts. The federal gift and estate taxes share one lifetime exclusion. The annual gift exclusion stays at $19,000 per recipient for 2026, so a married couple can move $38,000 to any number of people each year without touching the lifetime amount. Tuition paid straight to a school and medical bills paid straight to a provider fall outside the gift tax entirely.

One caution specific to Illinois: gifts reduce a federal estate, but the Illinois calculation adds adjusted taxable gifts back when it tests the $4,000,000 threshold. Giving property away during life also hands the recipient the old cost basis, which surrenders the Illinois step-up in basis an heir would have received at death. Talk to a tax advisor before a large gifting program.

Illinois Charges No Inheritance Tax

An estate tax bills the estate. An inheritance tax bills the person who receives property, usually at a rate that depends on how closely related they were. Illinois collects only the first kind.

The Attorney General's estate tax page tells you how old the other one is: an Illinois Inheritance Tax Release may be needed only when the decedent died before January 1, 1983. For every death since, receiving an Illinois inheritance triggers no state tax on the recipient.

Illinois also charges no separate probate tax to open an estate. What an estate does pay to the Circuit Court is a filing fee set by ordinance or resolution of the county board within the caps in 705 ILCS 105/27.1b, plus publication and, in most estates, reasonable compensation for the representative and the attorney. Those costs are covered in the Illinois probate guide.

Farms and Closely Held Businesses

Illinois farmland is where the $4,000,000 threshold bites hardest, and the Attorney General's fact sheet describes three forms of relief a Form 700 preparer may claim even when no federal return is required.

• Special use valuation. An estate may elect Section 2032A valuation for Illinois purposes, valuing qualified farm or business real property at its use value rather than its development value. Section 2 of the Act defines "qualified heir" by reference to Section 2032A(e)(1). The Attorney General posts Form 700AFF, an Affidavit of Material Participation, for this election.
• Alternate valuation. The fact sheet says an estate not required to file federally may elect Section 2032 valuation, which uses values six months after death, for Illinois purposes. Read that one with care. The same passage requires the estate to satisfy the Internal Revenue Code requirements for the election "except as modified by Illinois law," and Section 2032(c) allows the federal election only where it decreases both the gross estate and the combined federal estate and generation-skipping transfer tax. Neither the Code nor the fact sheet explains how the decrease-in-tax test works for an estate that owes no federal tax, or whether a valuation used only on an Illinois Form 700 carries over to income tax basis under Section 1014(a)(2). Both points are open, and the Illinois step-up in basis guide covers the basis side.
• Installment payment. An estate may elect Section 6166 deferral, with the maximum deferrable amount set by 35 ILCS 405/6(b). Form 4350a is the computation worksheet. Note that Illinois uses gross values, not the adjusted values on the federal return, to set the deferrable percentage.

Every form and attachment the IRS would require for those elections has to accompany the Illinois Form 700.

What to Do Now

1. Add it up honestly. Count life insurance you own, retirement accounts, trust property, your share of joint property, farm and business interests, and past taxable gifts. The number that matters is far larger than the probate estate.
2. Compare to $4,000,000, not $15,000,000. The state threshold is the one most Illinois families brush against.
3. If you are married and near the line, get the trust and the QTIP language in place. Illinois grants no portability, so the first spouse's exclusion is used or lost.
4. If a spouse has already died, ask about Form 706 anyway. Filing to preserve the federal DSUE costs far less than losing it, even though it does nothing for the Illinois side. An estate with no filing requirement of its own has until the fifth anniversary of the death to make the election under Revenue Procedure 2022-32.
5. Keep the estate tax and the income tax separate. The step-up in basis reaches nearly every inherited asset regardless of estate size, and it is the rule that usually decides what a family owes when they sell inherited property in Illinois.
6. Bring in an Illinois estate tax attorney above $4,000,000. The interrelated calculation, the apportionment ratio, and the QTIP election are not do-it-yourself work.

Frequently Asked Questions

Does Illinois have an estate tax?

Yes. Illinois imposes its own estate tax under the Illinois Estate and Generation-Skipping Transfer Tax Act, 35 ILCS 405/. The exclusion is $4,000,000 for anyone dying on or after January 1, 2013. An estate above that figure files Illinois Form 700 with the Attorney General.

Does Illinois have an inheritance tax?

No. Illinois charges no inheritance tax on what a beneficiary receives. The Attorney General's office notes that an Illinois Inheritance Tax Release is needed only when the decedent died before January 1, 1983.

How much is the Illinois estate tax on a $5 million estate?

The Attorney General's published example puts the Illinois estate tax at $285,714 on a $5,000,000 estate holding only Illinois property, with $0 of federal estate tax due. If half of that estate sat outside Illinois, the apportioned Illinois tax would be $142,857.

Is the Illinois estate tax exemption portable between spouses?

No. The Attorney General's instruction sheet states that portability and carryover of an unused exemption do not apply to the Illinois estate tax. Couples use a credit shelter trust and the Illinois-only QTIP election under 35 ILCS 405/2(b-1) to preserve both $4,000,000 exclusions.

Do I file an Illinois Form 700 if no federal return is required?

Yes, whenever the estate's gross value exceeds $4,000,000 after adding adjusted taxable gifts. The Illinois filing duty stands on its own, and the great majority of Illinois estates that file Form 700 owe no federal estate tax.

When is the Illinois estate tax due?

Nine months after the date of death, matching the federal due date under 35 ILCS 405/6(a). The Attorney General honors a federal extension and also grants its own on Form 700-EXT. An extension of time to file does not extend the time to pay.

Does a nonresident who owns Illinois property owe Illinois estate tax?

Possibly. The tax reaches transferred property with a tax situs in Illinois no matter where the owner lived. The estate calculates a preliminary tax as if everything sat in Illinois, then multiplies by the ratio of Illinois assets to total assets and files the Form 700 Addendum.

Does the Illinois estate tax change my basis in what I inherit?

No. They are different taxes. The Illinois estate tax is a transfer tax on the estate. Basis resets to date-of-death value under a separate federal income tax rule, and that reset applies whether or not any estate tax is owed.

Related Illinois Guides

• Illinois Step-Up in Basis
• How to Avoid Probate in Illinois
• Selling Inherited Property in Illinois
• Illinois Transfer on Death Instrument
• Illinois Executor Duties
• Illinois Probate Guide

This guide is general information about Illinois estate and federal transfer taxes. Tax rules change and the Illinois calculation is interrelated, so confirm any figure that affects your family with the Illinois Attorney General's Estate Tax Section, a licensed Illinois attorney, or a CPA before you file or plan around it.

Sources:

• Title: 35 ILCS 405/2, Definitions (state tax credit measured against a $4,000,000 exclusion for persons dying on or after January 1, 2013; separate and independent Illinois QTIP election at subsection (b-1)). Publisher: Illinois General Assembly, Illinois Compiled Statutes. Publication Date: Not listed. URL: https://www.ilga.gov/Legislation/ILCS/Fulltext?DocName=003504050K2
• Title: 35 ILCS 405/3, Illinois estate tax (imposition on transferred property having a tax situs in Illinois; apportionment for out-of-state property). Publisher: Illinois General Assembly, Illinois Compiled Statutes. Publication Date: Not listed. URL: https://www.ilga.gov/Legislation/ILCS/Fulltext?DocName=003504050K3
• Title: 35 ILCS 405/6, Returns and payments (federal due dates, filing with the Attorney General, payment to the State Treasurer on or after July 1, 2012, installment deferral, confidentiality). Publisher: Illinois General Assembly, Illinois Compiled Statutes. Publication Date: Not listed. URL: https://www.ilga.gov/Legislation/ILCS/Fulltext?DocName=003504050K6
• Title: Illinois Estate and Generation-Skipping Transfer Tax Act, 35 ILCS 405/. Publisher: Illinois General Assembly, Illinois Compiled Statutes. Publication Date: Not listed. URL: https://www.ilga.gov/Legislation/ILCS/Articles?ActID=609&ChapterID=8
• Title: Important Notice Regarding Illinois Estate Tax and Fact Sheet (2023 to 2026 decedents; $4,000,000 threshold, computation examples, no portability, Illinois QTIP election, civil unions, filing addresses, 2032A and 6166 elections). Publisher: Office of the Illinois Attorney General. Publication Date: Not listed. URL: https://illinoisattorneygeneral.gov/Page-Attachments/EstateTaxInstructionFactSheet.pdf
• Title: Estate Taxes (Form 700, estate tax calculator, Form 700AFF, Form 700-EXT, and inheritance tax releases for deaths before January 1, 1983). Publisher: Office of the Illinois Attorney General. Publication Date: Not listed. URL: https://illinoisattorneygeneral.gov/estate-taxes/
• Title: Form 700, Illinois Estate and Generation-Skipping Transfer Tax Return. Publisher: Office of the Illinois Attorney General. Publication Date: Not listed. URL: https://illinoisattorneygeneral.gov/Page-Attachments/Form700.pdf
• Title: Estate Tax payment information for individuals. Publisher: Office of the Illinois State Treasurer. Publication Date: Not listed. URL: https://www.illinoistreasurer.gov/Individuals/Estate_Tax
• Title: IRS releases tax inflation adjustments for tax year 2026 ($15,000,000 federal exclusion for 2026 decedents; $19,000 annual gift exclusion). Publisher: Internal Revenue Service. Publication Date: 2025. URL: https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill
• Title: About Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Publisher: Internal Revenue Service. Publication Date: Not listed. URL: https://www.irs.gov/forms-pubs/about-form-706
• Title: About Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes. Publisher: Internal Revenue Service. Publication Date: Not listed. URL: https://www.irs.gov/forms-pubs/about-form-4768
• Title: Estate Tax. Publisher: Internal Revenue Service. Publication Date: Not listed. URL: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
• Title: 26 U.S.C. 2032, Alternate valuation (subsection (c), election must decrease gross estate and estate tax; subsection (d), election made by the executor on the return). Publisher: Legal Information Institute, Cornell Law School. Publication Date: Current through recent public laws, accessed July 19, 2026. URL: https://www.law.cornell.edu/uscode/text/26/2032
• Title: 26 U.S.C. 1014, Basis of property acquired from a decedent (subsection (a)(2), basis in the case of an election under section 2032). Publisher: Legal Information Institute, Cornell Law School. Publication Date: Current through recent public laws, accessed July 19, 2026. URL: https://www.law.cornell.edu/uscode/text/26/1014

It is not legal advice.