For several years, estate planning in Illinois came with a countdown. The federal estate tax exemption was set to fall sharply at the start of 2026, and families with larger estates were urged to act before the window closed. That deadline is gone, but the reasons to look closely at your plan have not.
What Changed at the Federal Level
Congress removed the scheduled reduction. The One Big Beautiful Bill Act, signed in July 2025, set the federal estate and gift tax exemption at $15 million per person and $30 million for a married couple, effective January 1, 2026. That figure is now treated as permanent, and it adjusts for inflation in later years.
So the old “use it or lose it” pressure is behind us. For most families, federal estate tax is no longer the worry it once seemed to be.
The current numbers are confirmed in the IRS 2026 inflation adjustments.
Illinois Runs Its Own Estate Tax
This is the part many Illinois families miss. The state imposes its own estate tax, separate from the federal one, and it did not change. The Illinois exemption sits at $4 million per person. It is not indexed for inflation. And it is not portable between spouses.
That last detail carries weight. Under federal law, a surviving spouse can use a deceased spouse’s unused exemption. Illinois offers nothing similar. If assets pass to the surviving spouse without planning, the first spouse’s $4 million exemption is simply lost.
Illinois also works as a cliff tax. Cross the line by even a small amount, and tax applies to the portion above the threshold, with rates climbing to 16%.
The state’s own rules are laid out in the Illinois estate tax fact sheet.
How Fast an Estate Reaches $4 Million
Four million dollars can feel out of reach. In the Chicago suburbs, it adds up faster than most people expect:
- A home carrying years of appreciation
- Retirement accounts built over a long career
- A life insurance policy you own outright
- Brokerage, savings, and other accounts
- A business stake or a rental property
Steps That Still Make Sense
Several settled strategies can lower Illinois estate tax exposure, and the right combination depends on your family and your assets. A credit shelter trust, sometimes called a bypass trust, preserves both spouses’ exemptions and can shield up to $8 million for a couple. Lifetime gifting lowers the taxable estate, and Illinois has no separate gift tax. An irrevocable life insurance trust can hold a policy so its payout stays outside the taxable estate, though it needs to be in place well ahead of time.
A revocable living trust has a role too. It keeps assets out of probate and gives you a clean framework to build tax planning around. If your documents haven’t been reviewed since the law shifted, a Naperville revocable trust lawyer can tell you whether they still match your situation.
Families in the western suburbs can talk with a Naperville, IL revocable trust lawyer about updating or building these structures.
Where to Go From Here
Estate planning today is less about beating a deadline and more about matching your documents to the law as it now reads. At Kravets Law Group, attorney Daniel Kravets works directly with Illinois individuals and families to review existing plans, address state estate tax exposure, and put durable structures in place. If your plan was written before the 2026 changes, this is a sensible time to have it reviewed.