Illinois Estate Tax: Rates, Threshold, and Form 700 Explained

Yes, Illinois has its own estate tax — and it catches a lot of upper-middle-class families off guard. While federal estate tax only kicks in above roughly $13.99 million (2026), Illinois applies its estate tax to estates exceeding $4,000,000. That threshold has never been adjusted for inflation, which means more estates fall into it every year.

If you are settling an estate in Illinois, or doing your own planning, understanding how this tax works is not optional. A single missed planning step can cost a family hundreds of thousands of dollars.

Does Illinois Have an Estate Tax?

Illinois does have a separate state estate tax, governed by 35 ILCS 405. It operates entirely independently of the federal estate tax system. An estate can owe Illinois estate tax even if it owes nothing federally, and vice versa.

The tax applies to the gross estate — not just assets that go through probate. Life insurance payouts, retirement accounts, jointly held real estate, and Transfer on Death accounts all count toward the $4,000,000 threshold calculation. Many families assume that because assets bypassed probate, they escape the estate tax. They do not.

Non-residents of Illinois are not automatically exempt either. If a Florida or Texas resident dies owning a condo in Chicago or farmland in Champaign County, and their global gross estate exceeds $4,000,000, Illinois can tax the proportionate share of those in-state assets. The executor must file Form 700 and work through the proportionality calculations.

Illinois Estate Tax Threshold: $4,000,000 — and No Portability

The Illinois estate tax threshold is $4,000,000. This is a taxable threshold, not a credit against tax — meaning once the gross estate crosses that line, the full graduated rate schedule applies from the first dollar over the threshold.

The critical trap here is that Illinois does not recognize portability between spouses. Under federal law, when the first spouse dies, their unused exemption can be transferred to the surviving spouse. Illinois does not allow this. If the first spouse to die leaves everything outright to the surviving spouse, their entire $4,000,000 Illinois exemption is permanently wasted.

When the surviving spouse later dies with, say, $6,000,000 in combined assets, the entire $2,000,000 above the threshold is taxed — even though the couple collectively held two exemptions. Proper planning with a Qualified Terminable Interest Property (QTIP) trust can preserve both exemptions and defer the state estate tax at first death.

Illinois Estate Tax Rates

Illinois estate tax is graduated. Rates start at roughly 0.8% on amounts just over the $4,000,000 threshold and rise to 16% on the largest estates. The effective rate increases as the estate size grows, meaning a $6,000,000 estate faces a meaningfully lower effective rate than a $10,000,000 estate, but both face substantial bills.

There is no Illinois equivalent to the federal "applicable credit amount." The tax liability is computed directly using the rate schedule embedded in 35 ILCS 405 and reconciled through Form 700.

Illinois Estate Tax Form 700: Filing Rules and Deadlines

Form 700 — the Illinois Estate and Generation-Skipping Transfer Tax Return — is filed with the Illinois Attorney General's office. The executor must also remit any estimated tax payment directly to the State Treasurer.

Key deadlines:

• Form 700 must be filed within nine months of the date of death.
• Tax owed must be paid within the same nine-month window. An extension of time to file (Form 700-EXT) does not extend the time to pay — interest accrues on unpaid tax from the nine-month due date regardless.

Illinois Form 700 cannot be filed in isolation. The executor must also prepare a pro forma Federal Form 706 (even if no federal estate tax is owed) and submit it alongside Form 700. This is a significant paperwork burden for estates between $4,000,000 and the federal exemption threshold — common in the current environment where Illinois taxes apply but federal taxes do not.

The estate tax calculation requires the use of the Attorney General's interrelated calculators, which account for the marital deduction, any QTIP election, and the ratio of Illinois property to total property for non-resident decedents.

Mistakes That Cost the Most

Not accounting for all assets in the gross estate. Families who see a modest bank balance often forget to add life insurance, IRA balances, and jointly held real estate. A retiree with a $500,000 home, $800,000 in an IRA, a $1,500,000 life insurance policy, and joint accounts can cross $4,000,000 without realizing it.

Outright transfers to the surviving spouse without planning. As described above, this wastes the deceased spouse's Illinois exemption permanently.

Missing the nine-month deadline. Unlike federal estate tax where extensions of time to pay can sometimes be granted under hardship rules, Illinois takes a strict position. Unpaid tax accrues interest immediately.

Ignoring Illinois real estate owned by out-of-state decedents. If the executor of a non-Illinois resident's estate overlooks Illinois-sited real property, they may fail to file Form 700 entirely, triggering penalties and interest.

Settling an Illinois estate involves more than just state estate tax — there are probate thresholds, creditor deadlines, vehicle transfer forms, and court filing requirements that all run on their own timelines. The Illinois Estate Settlement Guide covers all of it in one place, including a tax checklist, creditor priority worksheet, and step-by-step executor roadmap.

See more Illinois guides →