Not which state is better — the wrong question. This instrument weighs both environments on the same five decision lenses and shows which coordination priorities change when the environment does. Same reasoning every state is read through; here, side by side.
Each lens turns a tax environment into a household decision. A dashed row means the two environments read the same on that lens; a solid row means they differ.
The household's operating-system domains each environment opens. The middle column holds where they agree; the outer columns are what is unique to each.
Titling assets to capture the fullest basis step-up the marital-property regime allows at the first death.
Whether — and how — a change of domicile is worth pursuing, and the facts (days, home, ties) that make it real rather than nominal.
Whether the state's estate exposure warrants credit-shelter / QTIP titling or lifetime gifting to move value below the state threshold.
Setting a harvesting cadence that captures the state rate a banked loss offsets, sequenced against the state's loss-carryforward rules.
Placing the high-turnover sleeve in tax-advantaged accounts so the state's rate falls on the least of the household's realized gains.
| Dimension | Florida | Illinois |
|---|---|---|
| Capital-gains rate | 0%No state tax on capital gains — and a harvested loss is worth only the federal rate here. · Fla. Const. art. VII, §5(a) (no state income tax on natural persons) | 4.95%Loss treatment conforms to federal: capital losses net against gains and carry forward. Top effective long-term rate 4.95%. · 35 ILCS 5/201(b)(1) (Illinois Income Tax Act) |
| Estate & inheritance | No state estate or inheritance tax — only the federal estate tax applies. | estateIllinois estate tax: a $4,000,000 exemption — not indexed, administered by the Attorney General (Form 700), not IDOR, and not portable between spouses. It is a cliff threshold: once the estate clears $4M the frozen IRC 2011 state death-tax credit table (0.8–16% over 21 brackets) applies to essentially the whole taxable estate, so the first dollars over $4M carry a ~29% effective cost. Broad-raise bills are pending but NOT enacted — HB 2601 (to $8M) stalled in Rules; SB 2970's $6M applies only to qualified farm property — so $4M stands. Confirm the filing figure with counsel. · 35 ILCS 405/3 (Illinois Estate & GST Tax Act) · 35 ILCS 405/2 (Illinois Estate & GST Tax Act) |
| Basis step-up | opt-inOffers an elective community-property trust: a couple can opt in to obtain a full (double) basis step-up at the first death. | Common-law (separate-property) state: at the first spouse's death only the decedent's half of jointly-held property steps up; the survivor keeps carryover basis on their half (IRC 1014(b)(9), 2040(b)). |
| Marriage treatment | No state income tax — no marriage penalty on the state return. | flatA single flat rate regardless of filing status — marriage-neutral on rate; watch fixed-dollar exemptions and AGI thresholds. · 35 ILCS 5/201(b)(1) (Illinois Income Tax Act) |
| Loss treatment | No state tax on capital gains, so a harvested loss carries no state benefit; its value here is only the federal offset. | federalCapital losses carry forward under the federal Section 1212 rules — a harvested loss nets against gains and rolls forward until used. · 35 ILCS 5/201(b)(1) (Illinois Income Tax Act) |
| Municipal bonds | exemptMunicipal-bond interest is exempt from state tax whether the issuer is in-state or out-of-state — the broadest muni preference (states with no tax on investment income, plus a few that exempt all munis by statute). | taxedTaxes municipal-bond interest from every issuer — in-state and out-of-state alike. One of the few states with no muni-interest preference at all. · 35 ILCS 5/203(a)(2)(A) and (N); 86 Ill. Adm. Code 100.2470 |
| QSBS (§1202) | no §1202No distinct state QSBS position applies here — either the jurisdiction levies no tax on the gain, or it does not separately recognize the §1202 exclusion. Confirm with a tax advisor. | §1202 okConforms to IRC §1202 — the federal qualified small business stock gain exclusion carries through to the state return. · 35 ILCS 5/102 (Illinois Income Tax Act) |
Because the rules differ, so does what coordination is worth. On an illustrative 30-year path, running a portfolio against each state's rules is worth an estimated ~$37,000/yr per $1M taxable in Florida versus ~$40,000/yr in Illinois — the coordination gap between the two (about +3.7%/yr vs +4.0%/yr modeled). A hypothetical, illustrative figure; the household's own depends on bracket, holdings, and residency (see the full basis of the estimate below).
State law reflects 2025 tax-year law; last reviewed 2026-07-07. Every classification is a summary of state law; where a primary-source citation has been verified, it is linked on the card.