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Why There’s No Inheritance Tax in Illinois
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Why There’s No Inheritance Tax in Illinois

SimplyTrustSimplyTrust Editorial·October 16, 2025

Learn why there’s no inheritance tax in Illinois and what that means in real life for the state’s residents and property owners.

If you’ve heard mixed messages about the inheritance tax in Illinois, here’s the short answer: there isn’t one. Illinois does not tax beneficiaries on what they inherit. The state does, however, impose a separate estate tax on larger estates, which is different from an inheritance tax. 

Why Is There No Inheritance Tax in Illinois?

Illinois once had an inheritance tax, but it no longer applies to recent passings. The Illinois Attorney General notes that an “Illinois Inheritance Tax Release” is needed only if a person passed before January 1, 1983—a practical marker that the old tax is a thing of the past for modern estates. 

For context, some states levy inheritance taxes on beneficiaries, with rates and exemptions that vary by relationship. Illinois is not on that list. Nationally, only a handful of states still use inheritance taxes. Iowa’s phase-out finished on January 1, 2025, leaving five states with an inheritance tax. (Again, not Illinois.)

An inheritance tax bills the person receiving the property. That doesn’t happen here. Instead, Illinois may tax the estate itself (via its estate tax) if its value exceeds the state threshold, which is separate from federal rules. The state Attorney General’s office administers those filings and provides worksheets and instructions.

Inheritance Tax in Illinois, in Action

  • You inherit from an Illinois resident. You won’t pay a tax in Illinois on what you receive. If the estate is large, any state estate tax is handled by the estate before distributions. 
  • You live in Illinois but inherit from a relative in another state. If that state levies an inheritance tax, you could end up paying a tax on what you inherited in that state.
  • You inherit an IRA. There’s no inheritance tax in Illinois, but distributions from a traditional IRA are still taxable as income under general tax rules. Different rules apply to Roth IRAs.

(Read More: Learn about revocable trusts in Illinois versus Nevada.)

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