Updated July 25, 2026. Quick answer (2026): If you are weighing a move out of Illinois in retirement, Illinois already leaves retirement withdrawals untaxed, so moving saves you nothing on income tax. What a move actually escapes is a tax at death. Four taxes change when you move — income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. This page prices all four for Illinois, then links a worked comparison for each destination.
What Illinois actually charges a retiree
| Tax | Illinois position, 2026 |
|---|---|
| State income tax | flat 4.95% |
| Social Security | not taxed (federally taxed portion fully subtracted) |
| Pension / 401(k) / IRA | Fully exempt: all federally taxed retirement income is subtracted — qualified employer plans (401(k), 403(b), 457), traditional IRA distributions (including Roth conversions), private and government pensions, railroad retirement. |
| Estate tax | yes – $4,000,000 exclusion (not indexed, not a true exemption: estates over $4M are taxed using the pre-2001 federal state-death-tax-credit table on the full taxable estate); effective marginal rates commonly stated as 0.8%-16%; administered by the IL Attorney General |
| Inheritance tax | none |
| Probate fee model | reasonable-fee |
| Probate filing fee | varies by county |
| Small-estate limit | $150,000 of personal property, excluding motor vehicles registered with the IL Secretary of State (which transfer regardless of value) — small estate affidavit, 755 ILCS 5/25-1, as amended by P.A. 104-0346, effective Aug 15, 2025 for deaths on/after that date (was $100,000). |
The mistake Illinois retirees make
Illinois taxes wages but exempts retirement-plan withdrawals. Every relocation calculator that compares top income-tax rates will therefore overstate your saving by roughly the whole amount — because on withdrawals you already pay nothing. The number that matters is at death.
Where Illinois retirees go, and what each move is worth
Destinations below are drawn from documented retiree migration. Each links a worked, statute-cited comparison of all four taxes for that specific pair.
- Illinois to Florida — income-tax saving is zero; the money is at death
- Illinois to Arizona — you would START paying state income tax
- Illinois to Texas — income-tax saving is zero; the money is at death
- Illinois to Tennessee — income-tax saving is zero; the money is at death
A new destination: Mississippi
Mississippi fully exempts all qualified retirement income — public and private pensions, 401(k)/403(b) and IRA distributions — levies neither an estate nor an inheritance tax, and runs a flat 4% for 2026 falling to 3.75% in 2027. Illinois already exempts retirement withdrawals, so this move saves you nothing on income tax. The reason to look at it is Illinois’s $4,000,000 estate cliff, where crossing the line taxes the whole estate rather than the excess. Illinois to Mississippi prices all four taxes that change on the move, statute-cited for 2026.
Getting the sequence right
Leaving Illinois cleanly is a sequencing problem as much as a tax one: domicile tests, what happens to property you keep behind, and the order of conversions and sales. See finding an advisor for a cross-state move for what to look for and the five questions to ask first.
Will Illinois still tax me after I move away?
Not on your retirement withdrawals, once you genuinely change domicile — but that is a harder test than a change of address, and what you leave behind stays in reach.
- Domicile is a test, not an address. Illinois can audit a departing resident. Days present, licence, registrations, where your advisers are and where you keep what you value all count.
- Property left behind stays reachable. Keeping a home in Illinois can keep part of your estate inside Illinois rules.
- Sequence any Roth conversion. It is taxed where you are domiciled in the year you convert — see how all 51 jurisdictions tax Roth conversions.
Full Illinois detail: Illinois retirement taxes. All corridors: retirement tax relocation hub.
Getting the order right
Move timing, conversion sequencing and estate exposure interact, and the order changes the total. Know what advice should cost before you buy it — see our advisor cost guide.
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Compare any two states yourself
The corridor pages cover the moves retirees make most often. For any other pair, the retirement tax comparison tool runs all 51 jurisdictions: pick two states and it returns the income-tax treatment of withdrawals, both death taxes and the probate fee model side by side. Enter an estate value and it tells you whether you cross either state’s estate-tax threshold — thresholds that run from Oregon’s $1,000,000 to Connecticut’s $15,000,000, several of them unindexed for years.
Which states should you even consider?
Published “best states to retire” lists blend an annual income-tax rate with a one-off estate threshold into a single score, which produces a ranking that is true for nobody. The personalised ranker takes your withdrawals and estate value and orders all 51 jurisdictions for your situation instead — Illinois ranks third for a $300,000 estate and drops off the list entirely at $6,000,000, because of a $4M cliff no listicle mentions.
Cite or share this guide
Suggested citation: Clear Money Guide, “Leaving Illinois in Retirement: the 2026 Tax Position,” statute-cited; clearmoneyguide.com/leaving-illinois-retirement-taxes/. Free to cite with attribution. Download the full dataset as CSV, or contact contact@clearmoneyguide.com for custom cuts.
Primary sources
- 35 ILCS 5/203(a)(2)(F)
- IDOR Publication 120 (Retirement Income)
- 35 ILCS 405/2(b)
- 35 ILCS 405/3
- 755 ILCS 5/27-1
- 755 ILCS 5/27-2
- 755 ILCS 5/25-1 (P.A. 104-0346)