Illinois estate tax computation

Date: 2026-05-18
Educational only — not legal or tax advice. Use Form 700 and the IL AG calculator for filing.

Agent skill: ~/.cursor/skills/illinois-estate-tax/ (scripts/il_estate_tax.py).

Statutory basis

• 35 ILCS 405/3(c): Illinois tax = state tax credit (§2) × (IL-situs gross ÷ worldwide gross).
• 35 ILCS 405/2: Credit = IRC §2011 as of 12/31/2001, with $4,000,000 exclusion (not federal portability).
• Form 700 Schedule A/B maps inputs to calculator lines 3 and 5; line 6 = full tax before apportionment; line 10 = apportioned tax.

Sources: ilcs-405-estate-tax-act, il-form-700-extracted, ilag-estate-tax-instruction-factsheet.

Step-by-step (current law)

1. Line 1 — Tentative taxable estate: Form 706 line 3a (or equivalent).
2. Line 2 — Illinois QTIP: Amount elected on this return, or add-back from first spouse’s IL QTIP on survivor’s death.
3. Line 3 — Illinois tentative taxable estate:
   • QTIP elected here: line 1 − line 2.
   • Prior IL QTIP add-back: line 1 + line 2.
   • Else: line 1.
4. Line 4 — Adjusted taxable gifts: Form 706 line 4.
5. Line 5 — Credit base with gifts: line 3 + line 4 (required by AG calculator).
6. Pre-apportionment tax (line 6): Interrelated calculation (below) on line 3, with federal cap keyed to line 5.
7. Situs (lines 7–9):
   fraction = line_7 ÷ line_8 (IL gross estate ÷ total gross estate, each including prior IL QTIP add-back).
8. Line 10: line_6 × fraction.

Situs apportionment

Per 405/3(c) and Form 700:

IL tax due = full_state_tax_credit × (illinois_gross_estate / total_gross_estate)

• Resident: Generally all property has IL situs except real/tangible physically in another state (Schedule D).
• Non-resident: Only IL-situs real and tangible.

Interrelated iteration

Illinois estate tax is deductible on the Illinois return, which lowers the taxable estate used for the credit — fixed point:

tax[n+1] = credit_table( (line_3 − tax[n]) − $60,000 )

• $60,000: Table adjustment in AG CalcHtm.js (legacy §2011 adjusted taxable estate mechanics).
• Credit table: IRC §2011 (12/31/2001) brackets — AG taxtable.htm, cached in skill assets/state-death-tax-credit-table.json.
• Converges when |tax[n+1] − tax[n]| < $1 (AG default).

Federal cap pass

If (line_5 − tax − $4,000,000) × 40% < tax, AG recomputes:

tax[n+1] = (line_5 − tax[n] − $4,000,000) × 40%

Caps Illinois tax when the credit table would exceed the federal-style limit. Estates below ~$4M after iteration typically settle at $0.

flowchart TD
  A[Line 3: IL tentative taxable estate] --> B[Iterate: TTE minus prior IL tax]
  B --> C["Credit table on (TTE − $60k)"]
  C --> D{Converged within $1?}
  D -->|no| B
  D -->|yes| E{Federal cap applies?}
  E -->|yes| F[Iterate 40% on line 5 minus tax minus $4M]
  E -->|no| G[Pre-apportionment tax line 6]
  F --> G
  G --> H[Multiply by situs fraction]
  H --> I[Line 10: IL tax due]

Married-couple planning (pointer)

Illinois has no portability — each spouse’s $4M must be used separately. Typical pattern: bypass (B) trust to shelter first death’s exemption + marital A / Illinois QTIP for deferral. See isba-married-tax-planning. This note does not model two-death simulations; run separate estimates per death.

Illinois-only QTIP: State election on Form 700 (box 3, Schedule C) independent of federal QTIP — reduces line 3 on first death; add-back on second.

HB2368 contrast (not law)

hb2368.md — proposed deaths on/after 1/1/2026: replace credit table with Illinois taxable estate × flat rate (5% / 10% / 16% / 22% on entire base; cliffs at $6M / $16M / $21M). Skill flag: mode: hb2368_hypothetical.

AG validation examples

From ilag-estate-tax-instruction-factsheet.