The Roth IRA in Illinois

Illinois does not tax a Roth IRA conversion, and it says so by name: a subparagraph of the Income Tax Act subtracts exactly the amount a conversion adds. No age gate, no cap, and no Illinois city — Chicago included — may tax it either. What Illinois does tax is an estate above $4,000,000, and the 4.95% you pay for choosing a Roth instead of pre-tax.

That last point is the one nobody writes about, and it runs opposite to what you would expect from a state that exempts retirement income. It is also why this page exists rather than a paragraph saying “Illinois is fine.”

This page is built from 146 facts checked against the Illinois Compiled Statutes, the Illinois Constitution, Department of Revenue publications and the Attorney General’s estate-tax materials. 114 were independently re-verified before publication. Two of the corrections changed the page’s central claim, and the section on that says which.

Why the conversion costs nothing

Most states answer this with a rate and an exclusion you have to qualify for. Illinois answers it with a sentence that names the transaction.

The Income Tax Act subtracts, from the income Illinois taxes, all amounts included in the taxpayer’s federal gross income in the taxable year from amounts converted from a regular IRA to a Roth IRA. That is the whole provision. It has applied since 1998, and it carries an unusual extra clause: it is expressly exempt from the section that otherwise sunsets deductions five years after enactment. So it does not lapse, and it never has.

Three things follow that are worth stating separately, because each is a question readers actually ask:

• No age gate. Convert at 40 or at 70; the subtraction reads the same.
• No dollar cap. Illinois does not run a New York-style $20,000 window. It is all-or-nothing, and it is all.
• No income phase-out. There is no MAGI test anywhere in the provision or the guidance.

The Department of Revenue names conversions twice in its own retirement-income publication, including in the list of what you must attach to support the subtraction. The subtraction goes on IL-1040 Line 5 — not Schedule M, which several summaries get wrong.

One footnote for precision

The subparagraph that names conversions covers a conversion “from a regular IRA.” A direct rollover from a 401(k) or 403(b) straight into a Roth IRA never touches a traditional IRA, so it falls outside that wording and rests instead on the general subtraction for retirement-plan income. The answer is still $0 — it is exactly the kind of income that subtraction covers, and nothing adds it back — but it is worth knowing that route relies on the general provision rather than one that names your transaction.

Authority: 35 ILCS 5/203(a)(2)(F) and (W); IDOR Pub 120 (R-12/25) · 35 ILCS 5/203(a)(2)(W) and 5/203(a)(2)(F); 35 ILCS 5/250; IRC §408A(d)(3)(A) · 35 ILCS 5/203(a)(2)(W); corroborated by IDOR Pub 120 (R-12/25), IDOR Taxpayer Answer Center answer.99, CGFA Illinois Tax Handbook for Legislators 2026 item 16 · IDOR Publication 120, Retirement Income (PUB-120 R-12/25), p.2 and p.3 · IDOR Publication 120, Retirement Income (PUB-120 R-12/25), p.2; 35 ILCS 5/203(a)(2)(F), (W) · verified 2026-07-28

Not at the local level either, and Chicago cannot change that

No Illinois municipality, county or school district taxes income. That is not an accident of the tax code — it is constitutional. The Illinois Constitution gives home-rule units only the power the General Assembly may provide to impose taxes measured by income or earnings, and the General Assembly has provided none. Chicago’s own published list of taxes carries no income, earnings, wage or payroll tax.

Set that against the two other big-city answers in this series. A New York City resident pays 3.876% of an entire conversion to the city on top of the state’s bill — about $11,949 all in on $100,000. Philadelphia has one tax that reaches unearned income and it excludes retirement accounts. Chicago has nothing to exclude, because it was never given the power.

Early withdrawals: where Illinois and Pennsylvania part company

This is a real divergence between the two states that exempt retirement income, and it favours Illinois. Pennsylvania taxes non-qualified Roth earnings taken before 59½ under a cost-recovery method. Illinois does not: those earnings are federally includible retirement-plan income, the Illinois subtraction has no age gate, and they come out. There is also no Illinois early-withdrawal penalty — nothing like California’s 2.5%.

Authority: 35 ILCS 5/201(b)(5.4); absence of any early-distribution addback in 35 ILCS 5/203(a)(2)(A)–(D-26); 2025 IL-1040 (no penalty line) · 35 ILCS 5/203(a)(2)(F) (via IRC §408); IDOR Pub 120 (R-12/25); IRC §408A(a), (d) · Ill. Const. art. VII, §6(e); CGFA Illinois Tax Handbook for Legislators 2026 (Dec. 2025), p.3; City of Chicago Dept. of Finance Tax List · Ill. Const. art. VII, §6(e); Ill. Const. art. IX, §3(a) · verified 2026-07-28

The part nobody mentions: Illinois charges 4.95% for choosing Roth

Here is the finding that surprised us, and it is the reverse of what a state that exempts retirement income ought to produce.

Illinois computes its tax starting from your federal adjusted gross income. That single fact decides everything. A deductible traditional IRA contribution, or a pre-tax 401(k) or 457 deferral, is an above-the-line exclusion — it never enters federal AGI, so it never enters the Illinois base. And the distribution is subtracted later. That route escapes Illinois at both ends.

Roth dollars do not. They earn no federal deduction, so they sit inside federal AGI, inside Illinois base income, and Illinois taxes them at 4.95% in the year you contribute. The qualified distribution is free later — but it was never going to be taxed by Illinois anyway.

Scope this carefully, because it does not always bite. It only applies where the pre-tax route is genuinely available to you. If your traditional IRA contribution would not be federally deductible — you are covered by a workplace plan and above the deduction phase-out — then both routes sit in federal AGI alike, and Illinois is genuinely neutral. For a workplace plan the pre-tax option is always there, so the 4.95% cost of electing Roth always applies.

And the necessary caveat: this is state-level mechanics. It is 4.95% against a federal decision that usually turns on much larger numbers, and nothing here says which account is right for anyone. It is simply a cost that exists and is almost never mentioned.

Two states that exempt retirement income, and only one of them is neutral

Where each state takes its cut — and where it doesn’t

Stage	PA — pre-tax	PA — Roth	IL — pre-tax	IL — Roth
Contribution / deferral	Taxed — it is compensation when earned	Taxed — it is compensation when earned	Not taxed — already out of federal AGI	Taxed at 4.95% — the dollars stay in federal AGI
Growth	Not taxed	Not taxed	Not taxed	Not taxed
Qualified distribution	Exempt	Exempt	Subtracted on Line 5	Never in federal AGI at all
Net state cost	Same either way	Same either way	Nothing, at either end	4.95% on the way in

Authority: 35 ILCS 5/203(a)(1) (base income = federal AGI); 5/203(a)(2)(F) and (W) (subtractions); IRC §219 and §62(a)(7) (above-the-line deduction); IL DOR Pub 120 (R-12/25) · 35 ILCS 5/203(a)(1); IDOR Pub 120 (R-12/25); IRC §402(e)(3), §403(b)(1), §457(a) · 35 ILCS 5/203(a)(1); absence of any retirement-contribution addback in 35 ILCS 5/203(a)(2)(A)–(D-26); IRC §219, §62(a)(7) · 35 ILCS 5/203(a)(2)(F); IDOR Publication 120 (PUB-120 R-12/25); IL-1040 Instructions (R-02/25) Line 1 and Line 5 · 35 ILCS 5/203(a); Ill. Const. 1970, art. IX, §3(b); IL-1040 Instructions (R-02/25), Lines 1, 9, 11 · verified 2026-07-28

One rate, and the voters kept it that way

Illinois’s rate is 4.95% and there is only one of it. The Illinois Constitution requires that a tax on or measured by income be at a non-graduated rate — so a conversion cannot push you into a higher Illinois bracket, because Illinois has no higher bracket to push into. There is no bracket arithmetic on this page at all.

What makes Illinois distinct in this series is not the clause but how it survived. In November 2020 Illinois voters were asked to remove it. The measure failed: 2,683,490 yes to 3,059,411 no — 46.73% of the votes cast on the question. Illinois requires either three-fifths of the votes on the question or a majority of all ballots cast in the election, and the measure reached neither, falling short by about 762,000 on the first test and 360,000 on the second.

Six states, four different constitutional answers

And Illinois’s is the only one the voters themselves decided

State	Provision	What it does	How it got there
Illinois	Art. IX §3(a)	Permits an income tax; requires a non-graduated rate. “A tax on or measured by income shall be at a non-graduated rate.”	Put to voters in 2020 and upheld by them. The amendment to remove it failed — 46.73% yes.
Pennsylvania	Art. VIII §1	Permits an income tax; forbids graduating it. Taxes “shall be uniform, upon the same class of subjects…”	Construed by the courts, not the electorate.
Texas	Art. VIII §24-a	Bars an individual income tax outright. “The legislature may not impose a tax on the net incomes of individuals.”	Adopted 2019; four more bans followed.
Florida	Art. VII §5(a)	Caps an income tax at the federally creditable amount. Bars a tax “in excess of the aggregate of amounts which may be allowed to be credited…”	That allowance is nothing, so the ceiling is zero.
New York	—	No constitutional constraint. —	Graduated rates plus a supplemental tax clawing back the lower brackets.
California	—	No constitutional constraint. —	1%–13.3%, and a 2.5% penalty of its own on early distributions.

Authority: 35 ILCS 5/201(b)(5.4); 35 ILCS 5/204; CGFA Illinois Tax Handbook for Legislators 2026 (Dec. 2025), p.71; 2025 IL-1040 Instructions · 35 ILCS 5/201(b)(5.4); Ill. Const. 1970, art. IX, §3(a); Booklet IL-700-T (R-12/25), eff. Jan. 1, 2026 · Ill. Const. art. IX, §3(a) and §3(b) · Illinois State Board of Elections, Official Vote, General Election November 3, 2020, Constitutional Amendment Proposal pp.1-4; Ill. Const. art. XIV, §2(b); Ill. Const. art. IX, §3(a) · verified 2026-07-28

The conversion is free. The tax return is not.

Illinois subtracts your conversion out of base income. But three separate Illinois benefits are switched off by federal adjusted gross income — the number the conversion raises, and the one Illinois’s own subtraction cannot reach.

Three hard cliffs, keyed to a number Illinois then throws away

Above $250,000 of federal AGI filing single, or $500,000 filing jointly. All three statutes use the same four words: “no taxpayer may claim.”

What you lose	Authority	What it is worth	What crossing costs
Personal exemption	35 ILCS 5/204(g)	$2,925/person for 2026, plus $1,000 each if 65+ or blind	A married couple both over 65 loses $7,850 of allowance — about $389 at 4.95%
Property tax credit	35 ILCS 5/208	5% of qualifying Illinois property tax paid	The whole credit. On a large Illinois property-tax bill this is the biggest of the three
K-12 education expense credit	35 ILCS 5/201(m)	Up to $750	The whole credit, up to $750

Note the drafting, because it is the same in all three: “no taxpayer may claim.” These are not phase-outs. One dollar over the threshold and the benefit is gone entirely. Three independent enactments, all keyed to a federal figure, none of which cares that Illinois gives the conversion back.

And a tax-free withdrawal can cost a senior the assessment freeze

The Senior Citizens Assessment Freeze Homestead Exemption is the Illinois analogue of the trap on our Pennsylvania page, and it works the same way for a different reason. Its household-income test is built on federal AGI plus add-backs — so a Roth conversion counts toward the $75,000 limit for 2026, even though Illinois subtracts that same conversion for income-tax purposes.

What losing the freeze costs is not a fixed number and that is the problem: it equals the gap between your current assessed value and your frozen base year, multiplied by the local rate. In a rising market that gap grows every year you hold the freeze, so the longer you have had it, the more losing it costs.

Two Illinois programmes a conversion cannot touch, worth stating so nobody worries about the wrong thing: the Senior Citizens Homestead Exemption has no income test at all, and neither does the General Homestead Exemption. Occupancy and age are the only conditions.

Authority: 320 ILCS 25/3.07; 35 ILCS 200/15-172; 35 ILCS 5/203(a)(2)(W) and (X) · 35 ILCS 200/15-170 · 35 ILCS 200/15-172; P.A. 104-0452 (SB 642) · 35 ILCS 5/204(g); 2025 IL-1040 Instructions, Line 10 'Income Exceptions'; 2025 IL-1040 Schedule ICR Instructions (R-12/25) · 35 ILCS 5/204; IDOR Informational Bulletin FY 2026-15 (Dec. 2025); IL-1040 Instructions (R-02/25), Step 4 Lines 10a–10c and Income Exceptions · verified 2026-07-28

The estate tax: a quarter of the federal threshold, and it dies with the first spouse

Illinois has an estate tax, not an inheritance tax — the reverse of Pennsylvania, and the difference matters more than it sounds. Pennsylvania taxes the beneficiary from the first dollar. Illinois taxes the estate, and only once it crosses $4,000,000.

Two features of that threshold do more work than the rate does:

• It is not indexed. $4,000,000 has been the figure since 2013, while the federal exclusion climbed to $15,000,000. Every year of inflation narrows the gap between an ordinary Illinois estate and the threshold.
• It is not portable. There is no Illinois equivalent of the federal deceased-spousal-unused-exclusion. A couple who simply leaves everything to each other can waste the first spouse’s $4,000,000 entirely. The statutory fix is a separate Illinois QTIP election, and it has to be made deliberately.

A Roth IRA balance is fully includible in the Illinois taxable estate.

One thing this is not: crossing $4,000,000 does not pull the whole estate into tax. It is a threshold with a steep phase-in — the Attorney General’s own worked example produces $28 of tax on $100 of excess, so the marginal rate near the threshold is around 28% and the earlier dollars are not dragged in. We flag that because the income-tax cliffs above are hard, and it would be easy to assume this one works the same way. It does not.

On the sourcing, in the interest of honesty: the Illinois computation runs off a federal credit table that Congress repealed, and the Attorney General’s calculation is not reproducible from that table alone — the estate-tax return itself directs filers to the Attorney General’s own calculator. So the $285,714 figure above is the Attorney General’s published number for a $5,000,000 estate. We are not going to derive a rate formula from it or extend it to other estate sizes, because we cannot show the arithmetic.

Authority: 35 ILCS 405/2 ("State tax credit"); Illinois AG Estate Tax Instruction Fact Sheet (2023–2026 decedents) · 35 ILCS 405/2 ("Transferred property"); 86 Ill. Adm. Code §2000.110(a)(9), (a)(18); Illinois Form 700, Schedule A Line 1 · 35 ILCS 405/2(b-1); 86 Ill. Adm. Code §2000.200; Illinois AG Estate Tax Instruction Fact Sheet · 35 ILCS 405/2, as last amended by P.A. 97-636, eff. 6/1/2012 (no indexing provision) · Illinois AG Estate Tax Instruction Fact Sheet (2023–2026 decedents); 35 ILCS 405/2 (no DSUE provision) · Illinois AG Estate Tax Instruction Fact Sheet, "Computation Examples of Illinois Estate Tax" · Illin · verified 2026-07-28

Creditors, and the protection your children do not inherit

Illinois exempts your retirement accounts from judgment and execution, and unusually there is no dollar cap in the statute — qualifying plans are “conclusively presumed” to be spendthrift trusts. The statute never says the word “Roth”; it predates the Roth IRA and reaches it through its definition of a retirement plan rather than by name.

Two structural points. Illinois is a bankruptcy opt-out state, so a debtor cannot elect the federal exemption list instead. And the homestead exemption was raised effective 1 January 2026 to $50,000 for an individual and $100,000 for two or more owners.

An inherited Roth is not protected

The Illinois Appellate Court has held that an inherited IRA is not exempt under the same section that protects your own. So the protection does not survive you.

Worth knowing where the controlling federal law came from: Illinois sits in the Seventh Circuit, and it was that court’s decision the Supreme Court affirmed in Clark v. Rameker in 2014. The question that unsettled several other states was, in a sense, decided next door. A surviving spouse who rolls the account into their own IRA is in a different position — that is no longer an inherited IRA.

Illinois is not a community-property state, so there is no analogue to the California and Texas problem where a spouse may already own half an account carrying only your name. Whether the spouse’s right to renounce reaches a Roth IRA passing by beneficiary designation outside probate is genuinely unsettled, and we have graded it that way rather than picking a side.

Authority: 735 ILCS 5/12-1006(a)–(b) · 735 ILCS 5/12-1006(b)(3); IRC §408A(a)–(b); P.A. 86-393, 86-1329 · 735 ILCS 5/12-1006(c) · 735 ILCS 5/12-1201 · 735 ILCS 5/12-901, as amended by P.A. 104-0120 (SB1738), eff. 1/1/2026 · 750 ILCS 5/503(a), (d) (Illinois Marriage and Dissolution of Marriage Act) · 755 ILCS 5/2-8 (Probate Act of 1975); no Illinois appellate decision located on non-probate reach · In re Clark, 714 F.3d 559 (7th Cir. 2013); Clark v. Rameker, 573 U.S. 122 (2014); In re Marriage of Branit, 2015 IL App (1st) 141297, ¶11 · In re Marriage of Branit, 2015 IL App (1st) 141297, ¶¶25–29, 39; 735 ILCS 5/12-1006 · verified 2026-07-28

The programme that enrols you in a Roth and checks nothing

Illinois has run a state-facilitated retirement programme since 2018 — rebranded from Illinois Secure Choice to My Illinois Savings in June 2026. Employers with five or more Illinois employees in every quarter of the prior calendar year, in business two or more years, and with no qualified plan of their own must facilitate it, on penalty of $250 per employee for a first non-compliant year and $500 per employee thereafter.

The default account is a Roth IRA, at 5% of gross pay, escalating one percentage point a year to a 10% cap. A traditional IRA is available, reached by recharacterising.

And the trap that matters: the programme does not screen the federal Roth income limits. It discloses them and places the duty on the saver. A high earner who never opts out is making excess contributions, which carry a 6% annual excise until corrected. You have 30 days from the notification letter to opt out before deductions begin, and you can opt out at any time afterwards.

One correction to a claim we expected to confirm and could not: Illinois was not first in the nation. OregonSaves piloted in July 2017; Illinois followed in 2018.

529 plans, and one thing Illinois gets right

Illinois subtracts up to $10,000 of 529 contributions a year, or $20,000 filing jointly — but only for Illinois plans, which is the opposite of Pennsylvania’s any-state parity. On the SECURE 2.0 rollover of a 529 into a Roth IRA, Illinois is friendly: it is statutorily excluded from “nonqualified withdrawal” treatment, so it does not trigger the recapture.

That recapture is worth understanding because it is unusually aggressive when it does apply: it reaches all prior-year deductions cumulatively, not just the current year’s. It simply does not reach a 529-to-Roth rollover.

Medicaid: spend-down, not an income cap

Illinois is a medically-needy spend-down state, not an income-cap state, so the Qualified Income Trust that Florida and Texas require above their caps is not the Illinois mechanism at all. Readers who have read about those states will otherwise assume the wrong structure.

On resources, Illinois turns on accessibility rather than annuitisation: an applicant’s own IRA or Roth IRA is countable if it is accessible, and drawing benefits flips it to income with the principal then exempt. That makes the Roth’s absence of lifetime required distributions a non-issue here — Illinois asks whether you are drawing, not whether you must. Unlike Pennsylvania, Illinois counts the community spouse’s retirement accounts: it pools all non-exempt resources of both spouses at the snapshot.

Authority: 15 ILCS 505/16.5 (definition of "nonqualified withdrawal"); 35 ILCS 5/203(a)(2)(D-22) · 35 ILCS 5/203(a)(2)(Y); IL-1040 Schedule M Line 13 instructions (2025) · 820 ILCS 80 (Illinois Secure Choice Savings Program Act); P.A. 98-1150 · 820 ILCS 80/30; 820 ILCS 80/60 · 820 ILCS 80/5 (definition of "IRA"); 820 ILCS 80/30 · 820 ILCS 80/5; 820 ILCS 80/60; P.A. 102-0179 (HB 117) · IDHS PM 07-02-17 (Annuities and Pensions), AABD medical / long-term care · IDHS PM 07-02-22 (Community Spouse Resource Allowance); 89 Ill. Adm. Code 120.379 · IRC §4973 (6% excise on excess contributions); IRC §408A(c)(3) (Roth MAGI limits); 820 ILCS 80 · verified 2026-07-28

Leaving Illinois saves nothing on the conversion, and a great deal at death

The headline is counter-intuitive and it is worth stating flatly: moving from Illinois to Florida, Texas or Tennessee saves exactly $0 on a Roth conversion. Illinois never taxed it. The saving people expect is already priced in at zero.

What the move does end is the estate tax. Illinois reaches only Illinois real estate and tangible personal property of a nonresident decedent — so once domicile genuinely changes, a Roth IRA, being an intangible, sits outside Illinois estate tax entirely. On the Attorney General’s figure for a $5,000,000 estate that is worth about $285,714. The income-tax reason to leave does not exist. The estate-tax reason is large.

It runs the other way too, and people moving in rarely think about it: the moment Illinois domicile is established, the whole Roth IRA enters the Illinois estate tax base. There is no basis reconstruction to worry about on the income-tax side — Illinois expressly ignores where you lived when you contributed or converted — but the estate exposure attaches immediately.

Illinois has no 183-day rule

This is structurally different from every state we have covered and it cuts both ways. Illinois residency turns on domicile alone — there is no statutory day-count test and no permanent-place-of-abode test. A departing Illinoisan cannot be caught by the mechanical trigger that catches departing New Yorkers.

What Illinois has instead is two rebuttable presumptions of residence: claiming an Illinois homestead exemption, and spending more days in Illinois than in any other single state. Both can be rebutted; neither should be ignored. And Illinois publishes no nonresident audit manual comparable to New York’s, so the framework is the regulation’s own facts-and-circumstances test.

Illinois does not need the federal protection

Federal law bars a state from taxing a former resident’s retirement income, and it covers a Roth IRA by definition rather than by analogy. But Illinois never reaches for it. Its own Income Tax Act refuses to allocate a nonresident’s retirement-plan income to Illinois in the first place, and Department of Revenue guidance reaches the right answer without citing the federal statute anywhere at all. A state-law refusal to allocate is a stronger place to stand than a federal preemption argument.

The two neighbours people actually move to

Both adjacent states tax what Illinois does not, which is worth knowing before treating a short move as a tax move. Indiana taxes a Roth conversion — 2.95% at state level for 2026 plus a county income tax between 0.5% and 3.0%, and that county layer has no Illinois equivalent at all. It has no estate or inheritance tax, though. Wisconsin taxes a conversion too, at 3.50% to 7.65%, with a new subtraction from age 67, and it has had no estate tax since 2008.

Reciprocity does not help with any of this: Illinois has agreements with Iowa, Kentucky, Michigan and Wisconsin, but they cover employee compensation only and say nothing about where a conversion or a retirement distribution is taxed.

Authority: 35 ILCS 405/3(a), 405/5(a)(1); 86 Ill. Adm. Code 100.3020(d), 2000.100(k); IL AG Form 700 item 7 · 35 ILCS 405/5(a)(2); cf. 405/5(a)(1) for resident decedents; IL AG Form 700 Schedule B · 35 ILCS 5/1501(a)(20); 86 Ill. Adm. Code 100.3020(c), Examples 1-3 and Agency Notes · 35 ILCS 5/203(a)(2)(F) (resident side); 35 ILCS 5/301(c)(2)(A) + Schedule NR Instructions R-12/25 (nonresident side) · 35 ILCS 5/301(c)(2)(A) · 86 Ill. Adm. Code 100.3020(f)(1)-(2) · IL Attorney General Estate Tax Fact Sheet, "Computation Examples of Illinois Estate Tax" (two-column layout; figures pair with the estate descriptions to their left); 35 ILCS 405/3(c) · verified 2026-07-28

Where Illinois is the cheapest state, and where it is the most expensive

The same account, state by state

six states verified so far · every row sourced on its own state’s page · verified 2026-07-28

	New York	California	Florida	Texas	Pennsylvania	Illinois
Taxes a Roth conversion?	Yes, minus a $20,000/yr window	Yes — in full	No	No	No — any age	No — named in the statute
How the answer is secured	Nothing structural	Nothing structural	Conformity ceiling	Outright ban	Flat rate by uniformity clause	Flat rate, upheld by voters
Local tax on a conversion?	Yes — NYC 3.876%	None	None	None	None	None — constitutionally barred
Taxes early Roth earnings?	Yes	Yes, + 2.5% penalty	No	No	Yes — 3.07%	No
Roth vs pre-tax: neutral?	No	No	Yes — nothing to tax	Yes — nothing to tax	Yes — taxes both alike	No — 4.95% to choose Roth
Your own Roth vs creditors	Strong	Weak — means-tested	Unlimited	Unlimited	Capped at the federal figure	Uncapped in the statute
An inherited Roth vs creditors	Courts split	Unsettled	Protected by statute	Named in the statute	Not protected — settled	Not protected
Death tax on your Roth?	Estate tax over ~$7M	None	None	None — now barred	Inheritance tax from $1	Estate tax over $4M
$100,000 conversion costs	~$11,949 (NYC)	~$9,300	$0	$0	$0	$0*
$5,000,000 estate costs	$0	$0	$0	$0	$0	$285,714

Eight traps

Six things people believe about Illinois that are not true

Public employees, and a second constitutional clause

Illinois’s constitution does something no other state in this series does: alongside fixing how income may be taxed, it protects a category of retirement benefit. Article XIII, Section 5 makes membership in a public pension system an enforceable contractual relationship whose benefits “shall not be diminished or impaired,” and in 2015 the Illinois Supreme Court struck down a pension reform act in its entirety on that clause.

Stated as mechanics and nothing more: an Illinois public employee’s starting position is a constitutionally protected defined-benefit promise, which is a different foundation from a private-sector worker weighing a Roth against a traditional account. We are not evaluating the state’s finances or predicting anything about benefits; that is outside what this page can responsibly say.

On Roth availability, the answers differ sharply by system, and one is a genuine gap:

• State of Illinois Deferred Compensation Plan — 457(b), accepts pre-tax or Roth deferrals.
• TRS (teachers) — runs its own Roth vehicle, the Supplemental Savings Plan, a 457(b) with a dedicated Roth option.
• SURS — Roth available in the Deferred Compensation Plan; no Roth inside the core Retirement Savings Plan.
• IMRF — no Roth account at all. Its Voluntary Additional Contributions programme is after-tax but is not a Roth, and the earnings are taxable on withdrawal. That distinction is easy to miss and it matters.
• City of Chicago — 457(b) accepting pre-tax and designated Roth contributions.

Apply the 4.95% point from earlier to all of them: for an Illinois resident, electing Roth inside one of these plans costs 4.95% going in that a pre-tax deferral does not. And note the asymmetry Illinois does draw — a governmental 457(b) distribution gets the same uncapped subtraction as a true government pension, but a non-governmental 457(b) at a tax-exempt employer is expressly not subtractable.

Authority: 35 ILCS 5/203(a)(2)(F); IDOR Publication 120 (PUB-120 R-12/25) · 35 ILCS 5/203(a)(2)(F); IDOR Publication 120 (PUB-120 R-12/25); IRC §402A(e)(1) · 40 ILCS 5/16-204; IRC §457(b), §414(d), §402A(d); TRS SSP Plan Document (amended Dec. 13, 2024) · 40 ILCS 5/Art. 15 (State Universities Retirement System); IRC §457(b); SURS DCP member brochure and DCP FAQ · 40 ILCS 5/Art. 7 (Illinois Municipal Retirement Fund); IMRF Voluntary Additional Contributions; IMRF Authorized Agent Manual §6.20(C) · IRC §457(b); §402A; City of Chicago Deferred Compensation Plan (Amended and Restated Plan Document) §1.1 · verified 2026-07-28

Questions people actually ask

The dataset, and how it was built

Every claim on this page comes from a dataset of 146 facts, each carrying its controlling statute or guidance, a source URL, a verbatim quote, a confidence grade and its verification verdict. You can download the whole thing.

Research ran across five domains, then every domain was re-checked by an independent pass whose instruction was to refute each claim rather than confirm it. Of 146 facts, 114 were confirmed and 34 were corrected before publication. None were left unverifiable.

Four of those corrections are worth naming, because three changed what this page says and one is the reason the page has the thesis it does:

• The 4.95% finding is a correction, not an original conclusion. Our own research first concluded that Illinois was neutral between Roth and pre-tax. The verification pass worked the arithmetic on a $10,000 workplace deferral and found the two routes do not net to neutrality. We had reasoned that a Roth contribution “gets no Illinois deduction because there is nothing to deduct” — true, but it skips the step that matters: those dollars stay inside federal AGI, and Illinois taxes what is inside federal AGI.
• We expected the estate tax to be a cliff at $4,000,000. It is not — it is a threshold with a steep phase-in, and the Attorney General’s own example proves it.
• We recorded Illinois as the first state in the nation to launch an auto-IRA. It was second; Oregon piloted first.
• Two cells rested on quotations that could not be found in the sources they cited. Both were removed rather than re-sourced.

Seventeen facts are graded medium and two low. Those are the ones where Illinois has genuinely not answered — whether the spouse’s right to renounce reaches a Roth IRA, and Roth availability inside the Chicago teachers’ plans, where no official source could be found either way. We would rather tell you that than fill the gap.

One sourcing limit stated plainly: the Illinois estate tax is computed off a federal credit table Congress repealed, and the Attorney General’s calculation cannot be reproduced from that table alone — the return itself points filers at the Attorney General’s calculator. We cite the published figure for the estate size stated and decline to generalise it.

This page describes rules. It is not tax or legal advice and it does not analyse your situation. Illinois’s estate tax and its non-portable exclusion interact with estate planning in ways that depend on facts we cannot see — if the numbers here are close to your own, that is a conversation for an Illinois attorney or CPA. Found an error? Tell us — corrections are logged publicly in our corrections log.

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