What Are the Opinions on the Inheritance Tax Rate in Illinois?


Quick Answer

The state of Illinois has no inheritance tax. The death tax imposed by Illinois is an estate tax, and only estates with a value of more than $4 million are subject to it as of 2015. Even estates worth over $4 million may escape the tax due to deductions.

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Full Answer

An inheritance tax is levied on the amount of a decedent's assets received by individual heirs, while an estate tax is levied on the overall value of the entire estate of a deceased person. Only six states levy inheritance taxes, while 16 states levy estate taxes. The Illinois estate tax is collected separately from the federal estate tax, which is only levied on estates larger than $5.43 million. Surviving spouses and civil union partners are exempt from paying estate taxes in Illinois, but they must still file returns even if tax is not due.

Both residents and non-residents must pay estate tax if the decedent had real estate or other assets in Illinois. Although assets held in living trusts are not subject to probate, they are still counted as part of the gross estate for tax purposes. Besides real estate, gross estate items subject to estate tax include bank accounts, stock and investment accounts, life insurance proceeds, retirement accounts and interests the decedent held in businesses. Personal property, such as vehicles, is also included.

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