For estates over $4 million, the tax rate is graduated with the upper level ($10.04 million and up) at 16 percent. Article 31 - Real Estate Transfer Tax Law; Article 32 - Continuation Of Prior Law - Statutes Repealed ... Illinois may have more current or accurate information. (1 days ago) State and federal income tax returns (IRS Form 1041 and state form IL-1041) must be filed for the estate. Nonetheless, a married decedent's estate can make an election to treat a trust of which the surviving spouse is the sole beneficiary as "qualified terminable interest property" ("QTIP" for short) for purposes of calculating the Illinois estate tax. Then, in December 2011, the Illinois legislature acted to raise the estate tax exemption to $3,500,000 for 2012 and $4,000,000 for 2013. Almost all retirement income in Illinois is tax free, including pension plans, retirement plans and Social Security. Code tit. In 2015, the Federal Estate tax exemp-tion amount was $5,430,000. When the second spouse dies, though, the estate can only use one spouse’s exemption. Effective July 1, 2012, an additional copy of the return, without attachments, must also be filed with the State Treasurer as indicated below. For nonresidents of Illinois, a 2012 estate may be subject to the Illinois estate tax if it includes real estate and/or tangible personal property having a situs within the state of Illinois and the gross estate exceeds $3,500,000. 6. Who will manage my estate after I die? Some couples use legal trusts to decrease the estate tax burden. The Illinois estate tax rules have changed significantly in the past few years. Illinois estate tax regulations (Ill. Admin. When Illinois became a state in 1818, the Illinois Constitution allowed the state and local taxing districts to tax property in direct proportion to its value. Whether you owe an estate tax or not, it might make sense to think about getting a financial advisor to help you consider all of your financial issues. What Illinois estate tax forms must be filed? 500 South Second Street For Illinois residents, a 2012 estate may be subject to the Illinois estate tax if the total gross estate exceeds $3,500,000. Remember that in Illinois, you pay taxes on the entire estate if it is above the $4 million threshold. How Should the New Federal Estate Tax Law Affect Illinois Estate Planning Strategy? As we discussed above, the first tool we use in an Illinois estate plan to minimize estate tax is to allow couples to take advantage of one another’s exemptions through revocable living trusts. The Illinois estate tax is determined using the inter-related calculation. In Kentucky, for instance, inheritance tax must be paid on any property inherited in the state, even if the heir doesn’t live there. 2. Illinois Estate Planning Laws An individual's personal belongings, real estate holdings, and other possessions make up that person's estate. This tax was originally set at 80% of the federal estate tax, minus state inheritance tax due. The Illinois estate tax return must be filed, and any estate tax due must be paid, within nine months after the decedent's date of death. It is portable between spouses, meaning if the right legal steps are taken, a married couple can protect up to $22.36 million. If you’re saving for retirement through an employer-sponsored plan, you can use our. Where are the Illinois estate tax return filed and tax payment made? If you think your estate will be subject to the estate tax, you should consider speaking to a financial advisor or an estate planning attorney to find how to use a trust. Filing tax returns — decedent’s final 1040, post-death trust income tax returns (1041) and estate tax returns, when applicable. Starting in 1949 the State of Illinois imposed an estate tax based on the federal estate tax. For Cook, DuPage, Lake and McHenry Counties, file the original of the return with: Office of the Attorney General Revenue Litigation Bureau This guide will walk you through what you need to know about estate tax in Illinois. Under current law in 2013, the amount exempt from Illinois Estate Tax is $4,000,000. The rate of 12% applies to the $400,000 above that amount, which comes to $48,000. If an estate exceeds that amount, the top tax rate is 40%. Using the tax table below, you see that the base tax for this bracket is $402,800. As a tax buyer, you are responsible for understanding the law and your responsibilities as a bidder and a buyer. If you think you need help with estate planning, you may want to consider working with a financial advisor. Welcome to FindLaw's hosted version of the Illinois Statutes. Here’s what to do: go to, When planning your estate, you’ll want to know exactly what assets you have, including what’s in your retirement account. Here are some estate planning issues to consider: 1. Who should get my money and property when I die? Here is an executive summary of the Federal and Illinois estate, gift and generation skipping tax exemptions and rates for 2018: Federal Estate Tax. Thus, married Illinois residents can defer payment of both Illinois and federal death taxes until after the death of the surviving spouse using ABC Trust planning. If a release is required, please call Chicago (312) 814-2491 or Springfield (217) 524-5095 for further assistance. The information presented below applies to deaths that occur in 2012 only. The 2017 federal tax law will not modify the Illinois estate tax exemption, which is set at $4 million. *The taxable estate is the total above the exemption of $11.18 million. 7. Who will m… The federal estate tax exemption is $11.18 million in 2018, after the 2017 tax law took effect. For married couples who have used AB Trust planning to reduce their federal estate tax bill, an Illinois death tax may be due on the B Trust after the first spouse's death due to the gap of $1,620,000 between the Illinois exemption of $3,500,000 and the federal exemption of $5,120,000. There is no inheritance tax in Illinois. Providing for and paying any federal and/or state estate tax, if applicable. 1  All residents and non-residents who receive income in the state must pay the state income tax. Note that when the 2012 tentative taxable estate plus adjusted taxable gifts exceeds $5,120,000, Illinois Form 700 is to be prepared in the same manner for 2012 as for 2011, and must therefore include a copy of IRS Form 706 with all attachments. When one spouse dies, all wealth transfers to the surviving spouse without being subjected to the estate tax. For deaths that occurred on or after January 1, 2012, use the following calculator provided by the Illinois Attorney General's office to calculate the tax due: 2012 Decedent Estate Tax Calculator. After the statute of limitations period tolls, or expires, taxpayers may use the tolling as an affirmative defense against collection efforts by the Illinois Department of Revenue. Unlike some other states, the Illinois exemption is not portable between spouses. For example, all assets left to a surviving spouse or civil union partner are not subject to Illinois estate tax. Outright transfers to a surviving spouse are not taxable. The last year the State of Illinois imposed real estate taxes was 1932. 3 The $2 million Illinois estate tax exclusion is not. Understanding How Illinois Estate Taxes Affect an Estate. The Illinois estate tax return must be filed, and any estate tax due must be paid, within nine months after the decedent's date of death. For more information about Illinois estate taxes, including information for the estates of decedents who died in 2011 and prior years, refer to the Illinois Attorney General's Estate Tax webpage. Residents of Illinois with estates over $4 million; Nonresidents of Illinois with real or physical property located in Illinois that is valued over $4 million; How does the Illinois estate tax differ from the federal estate tax? 5. The Illinois estate tax will then be determined using the inter-related calculation for 2012 decedents as discussed below. Illinois does not have an inheritance tax, which is levied on assets received by the inheritors of an estate. 100 West Randolph Street Property taxes in Illinois are very burdensome, with an effective rate of 2.32%. (a) Illinois estate tax. When is an estate subject to the Illinois estate tax? The sales tax system is a bit complicated. To easily calculate your tax, Illinois provides an online estate tax calculator. You must pay tax to Illinois on any income you earn there if you work there and live in any other state except Wisconsin, Iowa, Kentucky, or Michigan. This is because Illinois picks up all or a portion of the credit for state death taxes allowed on the federal estate tax return (federal form 706 or 706NA). Since there is no longer a federal credit for state estate taxes on the federal estate tax return, there is no longer basis for the Illinois estate tax. In 2009, the Illinois estate tax exemption was $2,000,000. Unlike some other states, the Illinois exemption is not portable between spouses, so when both people in a married couple have died the exemption is still $4 million. The percentage of Illinois assets to total assets is then computed with the percentage applied to the tax base for apportionment purposes to determine the amount of Illinois estate tax due. A full chart of federal estate tax rates is below. Estates valued under $4 million do not need to file estate taxes in Illinois. It is applied on estates worth more than $4 million. For all other counties, file the original of the return with: Office of the Attorney General Revenue Litigation Bureau Federal estate tax amounted to $211,976.17; Illinois estate tax was $52,487.63. https://www2.illinois.gov/rev/research/taxinformation/sales/Pages/rot.aspx There is a 1% statewide tax on groceries, drugs and medicine, plus local taxes of up to 1.25%. SmartAsset’s financial advisor matching service can help you find an advisor that’s a good fit for you. Note that this number may be reduced based on any federal estate taxes owed. The Illinois Es - tate Tax exemption amount was $4,000,000. How is the Illinois estate tax calculated? Understanding How Illinois Estate Taxes Affect an Estate Illinois charges its own tax on estates in addition to the federal estate tax, and the exemption amount does not mirror the federal amount. So for deaths in 2019, estates with an estimated gross value of more than $4 million must file an estate tax return. An Illinois resident who dies with property located in Illinois may be subject to income tax, the Federal Estate and Gift Tax, and the Illinois Estate Tax. A person whose estate … The base rate for general merchandise is 6.25%, and local taxes add between 1% and 4.5% to that number. Find your taxable estate bracket in the chart below. Illinois Compiled Statutes and Constitution. The estates of Illinois residents, as well as the estates of nonresidents who own real estate and/or tangible personal property located in Illinois, are subject to a state death tax under the following guidelines. Search Illinois Statutes. If you add that to the base rate, the total tax is $450,800. Jared R. Cloud is a Partner at McDermott Will & Emery LLP in Chicago, where he focuses his practice on estate and trust litigation. In 2014, the estate tax exemption on the federal level is $5.34 million for a single person and $10.68 million for a couple. The estate tax is a tax some states and the federal government levy on the estates of wealthy people after they have died but before the money is given to their heirs. Known as an Illinois QTIP election, the deduction permits full utilization of the amount ($3.5 million) that can be passed free of federal estate tax by the first spouse to die, while deferring until the surviving spouse's death the Illinois estate tax ($209,124 under current law) that would otherwise be due on the amounts in excess of the $2 million that Illinois allows to pass estate tax free. That’s the second-highest in the country. The second column, Base Taxes Paid, shows what you owe on money that falls below your bracket. ... provision is made by statute for apportionment of estate taxes in the absence of specific testamentary direction to the contrary. The Illinois Estate tax is levied on net assets over $4 million of the estates of the deceased. Mr. Photo credit: ©iStock.com/FatCamera, SmartAsset, ©iStock.com/filo, Bank of America® Travel Rewards Visa® Credit Card Review, Capital One® Quicksilver® Cash Rewards Credit Card Review, 7 Mistakes Everyone Makes When Hiring a Financial Advisor, 20 Questions to Tell If You're Ready to Retire, The Worst Way to Withdraw From Your Retirement Accounts. The Illinois estate tax rate is graduated and goes up to 16%. Inheritance Tax Releases: An Illinois Inheritance Tax Release may be necessary if a decedent died before January 1, 1983. Let’s say your total estate is worth $5.5 million. First, you deduct $60,000 (per the Illinois Secretary of State), leaving an adjusted taxable estate of $5,440,000. In 2011, the Illinois legislature acted quickly to reinstate the state estate tax with a $2,000,000 exemption. Illinois does not have a gift tax although lifetime gifts [adjusted taxable gifts (as defined for Federal estate tax return purposes)] are included in the calculation to determine the amount of the Illinois estate tax due upon death. The Illinois Tax Rate The state's personal income tax rate is 4.95% as of the 2020 tax year. (1) For purposes of the Illinois estate tax, in the case of a decedent who was a resident of this State at the time of death, all of the transferred property has a tax situs in this State, including any such property held in trust, except real or tangible personal property physically situated in … What about Illinois Estate Tax? Suite 15-600 The uncertainty continues with the passage of Tax Act 2010 1 and recent amendments to the Illinois estate tax. Illinois and Federal Estate Taxes. [Citation.] SmartAsset can help you find the right financial advisor for you. Vehicles have their own sales tax ranging from 6.25% to more than 8.5%. But if the estate is large enough, a return must still be filed. How Much Do I Need to Save for Retirement? He is a fellow of the American College of Trust and Estate Counsel, a member of the Chicago Estate Planning Council, and a Past Chair of the Chicago Bar Association’s Trust Law Committee (2015 – 2016). Note: The chart below shows no taxes owed on the first $40,000 of taxable income because of a system of tax credits from the state. The estate representative of a 2012 estate that is subject to the Illinois estate tax must file an Illinois Estate & Generation-Skipping Transfer Tax Return, Form 700, as well as a federal estate tax return, IRS Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return (or any other form containing the same information), even if the estate is not required to file IRS Form 706. How have the Illinois estate tax rules changed in the past few years? Springfield, Illinois 62706. Illinois Estate Tax Rate The estate tax rate for Illinois is graduated and the top rate is 16%. 3. 400 W. Monroe, Suite 401 Effective July 1, 2012, all estate tax payments should be directed to one of the State Treasurer’s offices, which is encouraging people to mail the applicable returns, attachments, and payments to the Springfield office; however, taxes may be paid in person at either office indicated below: Illinois State Treasurer Estate Tax Division The inheritance tax of other states could apply to you, though. Here you will find a collection of state laws passed by the Illinois General Assembly, and organized by subject area into Chapters and Acts. For non-retirees, calculating Illinois income tax is fairly easy as the state has a flat tax of 4.95% that applies to everyone, regardless of income. The estate tax threshold for Illinois is $4 million. NOTE: State laws change frequently and the following information may not reflect recent changes. The estate tax rate for Illinois is graduated and the top rate is 16%. What is the Illinois estate tax? Is there enough money to provide for my family? 13th Floor Illinois has neither an estate tax – a tax paid by the estate, nor an inheritance tax – a tax paid by a recipient of a gift from an estate. In Illinois, the estate tax threshold is $4 million. You can figure out what your take home pay will be using our Illinois paycheck calculator. **The rate threshold is the point at which the marginal estate tax rate goes into effect. How does my property settlement agreement with my former spouse impact my estate? An extension of time to file the Illinois estate tax return and related forms and pay any tax due may be requested; however, this will not extend the time to pay the tax, and interest will accrue during the extension period. Read the Illinois tax sale law. Making decisions regarding investment and disposition of assets. For current tax or legal advice, please consult with an accountant or an attorney since the information contained in this article is not tax or legal advice and is not a substitute for tax or legal advice. Under current … This can be cumbersome reading, but it's essential for you to know what you're getting into. If you exceed your annual gift tax exclusion limit by giving more than $15,000.00 to a single individual, the amount of the gift in excess of the annual limit will reduce your lifetime estate and gift tax exclusion limits for … Are transfers to a surviving spouse taxable? You can use the same method described in the Illinois Estate Tax section to figure out your federal estate tax burden. Here’s an example. Where can I find additional information about Illinois estate taxes? This means that if you die and your total estate is worth less than $4 million, the estate won’t owe anything to the state of Illinois. The State of Illinois levies a separate estate tax on estates of Illinois resident decedents and estate of non-residents owning real property in Illinois. 2018 Exemption Equivalent: $11,200,000* (up from $5,490,000 in 2017) Annual Inflation Indexing: Yes* (rounded annually to the nearest $10,000) Chicago, Illinois 60601. In the past, the Illinois estate tax was merely a “pick-up” tax that did not increase the total tax bill. If your estate is worth more than $4 million, though, there is a progressive estate tax rate for all wealth your estate will have to pay before money can be dispersed to your heirs. That doesnt mean the estate will actually owe tax, because tax deductions may reduce the amount of the taxable estate and reduce or eliminate any tax. How much property should I give to my spouse or my children? By Julie Garber, About.com Guide. The 2021 Illinois estate tax exemption amount currently remains $4,000,000.00, the same amount as 2020. Compare the Top 3 Financial Advisors For You, All of this can be complicated, so it’s understandable if you still have questions. For both resident and non-resident decedents, the tax base will be calculated assuming all assets are located within Illinois. This means that if your estate is worth more than $4 million when you die, you will owe money to the state before your heirs can receive any money from your estate. *The taxable estate is the total above the exemption of $4 million. It is a tax assessed on the assets you own at the time of your death less the debts and expenses related to your estate. If you live in Illinois, then you live in one of a handful of states that still collect a state death tax. In 2010, the Illinois estate tax was repealed due to changes in the federal estate tax laws. 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