Illinois Estate Tax: Threshold, Form 700, and Deadlines

The Illinois estate tax is a state-level tax on the transfer of assets at death that applies when a person’s gross estate exceeds $4 million. It runs on graduated rates from 0.8% to 16% and operates entirely separately from the federal estate tax.¹ Because the federal basic exclusion is $15 million per person for 2026, many Illinois estates that owe nothing to the IRS still owe a meaningful bill to the state.²

The $4 Million Filing Threshold

An Illinois estate tax return (Form 700) is required when the gross estate plus adjusted taxable gifts exceeds $4 million.¹ That figure has been fixed since January 1, 2013 and is not indexed for inflation, so rising property values push more estates over the line every year.³

The number is a threshold, not a credit. An estate worth $3.99 million owes nothing. An estate worth $5 million in Illinois property owes roughly $285,714, because once you cross the line the tax applies from the first dollar of the adjusted taxable estate rather than only to the amount above $4 million.¹ That cliff is why estates near $4 million have a strong reason to plan.

How Illinois Differs From the Federal Estate Tax

The 2026 federal exclusion is $15 million per person, so a $6 million estate faces zero federal tax and a real Illinois tax.² Even so, a federal Form 706 (or an equivalent document) must accompany the Illinois return whether or not federal tax is owed.⁴

Two federal features do not carry over. First, there is no portability. A surviving spouse cannot inherit the unused portion of the deceased spouse’s $4 million threshold, so each spouse’s exclusion is use-it-or-lose-it. Second, Illinois has no separate gift tax, but adjusted taxable gifts still count toward the gross estate value used to decide whether a return is required.¹

Rates and How the Tax Is Calculated

Illinois uses a graduated rate schedule drawn from the old federal state death tax credit table. Rates start at 0.8% and reach 16% on adjusted taxable estates above $10.04 million.⁵

$0 – $40,000: 0%
$40,000 – $90,000: 0.8%
$90,000 – $140,000: 1.6%
$140,000 – $240,000: 2.4%
$240,000 – $440,000: 3.2%
$440,000 – $640,000: 4.0%
$640,000 – $840,000: 4.8%
$840,000 – $1,040,000: 5.6%
$1,040,000 – $1,540,000: 6.4%
$1,540,000 – $2,040,000: 7.2%
$2,040,000 – $2,540,000: 8.0%
$2,540,000 – $3,040,000: 8.8%
$3,040,000 – $3,540,000: 9.6%
$3,540,000 – $4,040,000: 10.4%
$4,040,000 – $5,040,000: 11.2%
$5,040,000 – $6,040,000: 12.0%
$6,040,000 – $7,040,000: 12.8%
$7,040,000 – $8,040,000: 13.6%
$8,040,000 – $9,040,000: 14.4%
$9,040,000 – $10,040,000: 15.2%
$10,040,000 and above: 16.0%

These rates apply to the adjusted taxable estate, not the gross estate. The actual math is more involved than reading a bracket because the state tax can be deducted on the federal return, and that federal deduction changes the state tax, which changes the federal deduction again. The Attorney General calls this the interrelated calculation and provides an online calculator that handles it.¹

What Counts Toward the Gross Estate

For an Illinois resident, the gross estate covers almost everything owned at death: Illinois real estate, tangible personal property such as vehicles and jewelry, and intangible property wherever it is held. Bank accounts, brokerage accounts, retirement funds, and business interests are all included even when the institution sits in another state.

Non-residents are pulled in when they own Illinois real estate or tangible personal property and their total gross estate exceeds $4 million. The tax is first computed as if all assets were in Illinois, then apportioned by the ratio of Illinois assets to total assets. Estates with less than 100% of assets in Illinois complete a Form 700 Addendum for that apportionment.¹

To reach the taxable estate, the executor subtracts allowable deductions from the gross estate. Funeral expenses, administrative costs, and debts owed at death are commonly deductible. Assets passing to a surviving spouse or a qualifying charity may qualify for the marital or charitable deduction. Real estate and unique personal items usually need professional appraisals establishing fair market value as of the date of death.

Filing Form 700

Form 700 is filed with the Illinois Attorney General’s Office. There is no electronic filing option; the return must be submitted by mail, courier, or hand delivery.⁶ Tax payments go somewhere different: the Illinois State Treasurer, using the State Treasurer’s Estate Tax Payment Form.¹ Sending the check to the wrong office is a common mistake.

A federal Form 706 or equivalent document must be attached to the Illinois return even when no federal tax is due.⁴ The filing package typically includes the death certificate, bank and investment statements as of the date of death, property appraisals, and valuations for any business interests.

The person responsible for filing and paying is whoever would have been required to file the federal estate tax return, even if no federal return is actually due.⁷ That is usually the executor or personal representative.

Deadlines, Extensions, and Late Penalties

The Illinois return and payment are both due nine months after the date of death, matching the federal due date.¹

To buy more time, file Form 700-EXT with the Attorney General’s office before the nine-month deadline. If a federal extension has already been requested, attach a copy; for automatic federal filing extensions, proof of timely mailing federal Form 4768 is accepted.⁸ An extension of time to pay, as opposed to just an extension to file, requires a written explanation of why full payment by the due date is impossible or impractical. Interest keeps running even when a payment extension is granted.

Under the Illinois Uniform Penalty and Interest Act, a late payment made within 30 days of the due date faces a 2% penalty. After 30 days, the penalty rises to 10%, and statutory interest accrues on top.

Planning Points for Married Couples

The lack of state-level portability is the single biggest planning issue for married Illinois couples. Federally, a surviving spouse can inherit the unused portion of the first spouse’s $15 million exclusion.² Illinois offers no equivalent.¹ If the first spouse leaves everything outright to the survivor, the marital deduction wipes out state tax at the first death, but the survivor then holds all the assets against only one $4 million threshold.

A bypass trust (sometimes called a credit shelter trust) funded at the first death up to $4 million shelters that amount from tax in the surviving spouse’s estate. The surviving spouse can still benefit from the trust’s income and, in many cases, its principal. When the second spouse dies, the trust assets are not included, roughly doubling the amount protected for the couple to $8 million.

Illinois also permits a state-only QTIP election, independent of any federal QTIP election. The person filing the Illinois return can treat qualified terminable interest property as eligible for the marital deduction on the state return even without making the same election federally.⁹ That flexibility lets a plan split assets between a bypass trust and a QTIP trust to minimize combined Illinois tax across both deaths. Property covered by the QTIP election is included in the surviving spouse’s estate at the second death.

Getting a Certificate of Discharge

After the return is reviewed and any tax paid, the estate can request a Certificate of Discharge confirming that the Illinois estate tax obligation has been satisfied.⁴ Estates that owe no tax can also request the certificate if a Form 700 was filed. Obtaining it before distributing assets to heirs is worth the wait, because without it an executor can face personal liability if the state later determines that additional tax was due.

1
Illinois Attorney General. Illinois Estate Tax Instruction Fact Sheet
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
3
Justia Law. Illinois Compiled Statutes 35 ILCS 405
4
Illinois Attorney General. State of Illinois Estate and Generation-Skipping Transfer Tax Return
5
Illinois Attorney General. State Death Tax Credit Table
6
Illinois Attorney General. Estate Taxes
7
Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 405
8
Illinois Attorney General. Form 700-EXT Request for Extension of Time to File a Return and/or Pay Illinois Estate and Generation-Skipping Transfer Taxes
9
Illinois General Assembly. Illinois Compiled Statutes 35 ILCS 405/2 – Definitions