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Illinois Estate Tax

Illinois levies its own estate tax with a $4M exemption and a top rate of 16%. Illinois does not index its exemption for inflation, so more estates fall within range over time.

Priya Raman
By Priya Raman, Contributing Writer, Policy & Regulation
Updated 2026-07-08

Illinois froze its exemption, and that matters more each year

Illinois sets its estate tax exemption at a flat $4,000,000, with rates that climb to 16% above that line. Unlike the federal exemption, which rises with inflation, Illinois has left this figure as a static statutory threshold, so it quietly catches more estates every year as home values and retirement accounts grow. Only the taxable estate above that $4 million line is taxed, on a graduated schedule; the unlimited marital deduction and charitable bequests reduce the taxable estate first, exactly as they do federally. Compare your Illinois and federal totals in the calculator.

Illinois estate tax, 2026 (verified July 2026)
FigureAmount
Exemption$4,000,000
Top rate16%
SourceIllinois estate tax statute (flat threshold, not annually indexed)

Planning around a threshold that does not move

Because the $4 million threshold does not move with inflation, an Illinois estate can face a real state bill even when it clears the federal exemption by a wide margin. Lifetime gifting (see the gift tax calculator) and the step-up in basis (the step-up calculator) remain useful levers for estates approaching the threshold. Confirm the current figure with the Illinois Department of Revenue.

Good to know

FAQs

Why does Illinois catch more estates every year?

Its $4 million exemption is a flat statutory threshold that is not adjusted for inflation, so as home values and account balances grow, more estates cross the line without the exemption moving to match.

Is Illinois's rate flat or graduated?

Graduated, topping out at 16% on the taxable estate above the exemption. Smaller amounts above the threshold face lower rates before reaching the top bracket.

Can lifetime gifting reduce Illinois exposure?

Illinois has no state gift tax, so lifetime gifts made under the federal annual exclusion or lifetime exemption can shrink the estate that Illinois taxes at death. The gift tax calculator covers the federal side.

Is this tax advice?

No, it is an educational reference. Confirm current figures with the Illinois Department of Revenue or an estate attorney.