Congress made the $15 million federal estate tax exemption permanent, and it took effect January 1. The One Big Beautiful Bill Act, signed July 4, 2025, ended years of sunset uncertainty for good. A married couple can now shelter $30 million with a portability election. For nearly every family in the country, the federal estate tax stopped mattering.
Illinois didn't get the memo. The state taxes estates above $4 million, a threshold unchanged since January 1, 2013 (35 ILCS 405/3(b)). No portability between spouses. No inflation adjustment. Rates that climb to 16%. An estate that owes the IRS nothing can still owe Springfield six figures.
Clearing the federal line tells you nothing about Illinois
The two taxes are calculated independently, on separate returns, against different thresholds. A couple with a combined $8 million estate could owe zero federal estate tax and still face a substantial Illinois bill at the second death.
The math near the threshold is unforgiving. Illinois computes its tax using the old federal state death tax credit table as it stood on December 31, 2001, run through an interrelated calculation. The practical effect: effective rates rise sharply just past $4 million, so crossing the line by a modest amount triggers a bill that feels wildly out of proportion to the excess. The Illinois Attorney General publishes Form 700 and a calculator. If you're anywhere near the line, run the actual numbers. Rules of thumb are how people get surprised.
Trump Accounts opened July 4, and the IRS just waived the gift tax paperwork
The OBBBA turned one this week, and two pieces of news landed with the anniversary.
Trump Accounts, the new Section 530A savings accounts for children, opened for contributions on July 4. Children born between January 1, 2025 and December 31, 2028 receive a one-time $1,000 Treasury deposit. Family members and other individuals can contribute up to $5,000 per child per year, with employer contributions capped at $2,500 inside that same limit.
Three days before launch, the IRS issued Revenue Procedure 2026-25, a gift tax reporting safe harbor. If your only taxable gifts for the year are cash contributions to Trump Accounts, your total gifts to each child stay at or under the $19,000 annual exclusion, and you have no other reason to file a gift tax return, no Form 709 is required. Treasury acted because nearly 6 million account elections were already in, and the alternative was millions of new gift tax returns every year.
There's an Illinois wrinkle worth knowing. Illinois adds a decedent's adjusted taxable gifts back into the estate when testing the $4 million threshold, but annual-exclusion gifts don't get added back. A grandparent funding a Trump Account inside the safe harbor skips the paperwork and moves money out of a taxable estate cleanly on both the federal and Illinois side. The same holds for any disciplined annual-exclusion gifting program, Trump Account or not.
Married couples lose an exemption without a trust
Portability is the widest gap between the two systems. Under federal law, a surviving spouse can claim whatever exemption the first spouse didn't use. Illinois offers nothing like it. The standard "everything to my spouse" plan avoids tax at the first death through the marital deduction, then wastes that spouse's $4 million exemption permanently. The survivor dies with one exemption instead of two.
A credit shelter trust, sometimes called a bypass trust, fixes this. At the first death, up to $4 million flows into an irrevocable trust that supports the surviving spouse but sits outside their taxable estate. The couple protects $8 million combined instead of $4 million. If you already use a revocable living trust to avoid probate, the bypass provisions belong inside it.
Beyond that, the tools are familiar: annual-exclusion gifting, an irrevocable life insurance trust to keep policy proceeds out of the estate, and charitable planning where it matches the family's goals. None of it is complicated on its own. All of it has to exist before the death, not after.
HB2601 would raise the exemption to $8 million. It hasn't moved.
HB2601 would double the Illinois exemption to $8 million for deaths on or after January 1, 2026. It was introduced in February 2025 and re-referred to the House Rules Committee that March, where it has sat since. Companion proposals, including one that would index the exemption to inflation, have gone nowhere either.
Plan against the law as it exists today. A plan built around a bypass trust and a gifting program adapts easily if Springfield acts. A plan built on the assumption that relief is coming does not.
If your estate is near $4 million, or your combined estate as a couple is near $8 million, the numbers deserve a working session rather than a guess. That is exactly what the Family Future Planning Session is built for.
This article is for general informational purposes and does not constitute legal advice. No attorney-client relationship is created by reading this post. Contact Emad Mahou directly to discuss your specific situation.
