Is Inheritance Taxable as Income in Illinois? | Does Illinois Have an Inheritance Tax?

Article written by Illinois Attorney Kevin O’Flaherty

In this article, we answer the question “is inheritance taxable as income in Illinois?

What is Inheritance Tax?

Inheritance tax is when inheritance received by the beneficiary or heir of a deceased person’s estate is counted as income for the purpose of calculating the beneficiary’s or heir’s income taxes for the year in which the inheritance is received.

Does Illinois Have an Inheritance Tax?

Although a few states do impose an inheritance tax, Illinois does not. This means that inheritance received by the beneficiary or heir of an estate does not count as taxable income for the purpose of calculating the recipient’s income taxes.

This isn’t the end of the story, however, because Illinois does have an estate tax.

Estate tax is a tax that must be paid by the estate of a deceased person prior to distributing the remainder of the estate to the deceased person’s beneficiaries and heirs.

In Illinois, when an individual passes away owning more than $4 million in assets, the individual’s estate will be subject to Illinois estate tax to…