Illinois and Indiana, weighed as two operating environments.
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.
moderate
Rate pressureHow much does the state erode each realized gain?
low
IllinoisThe state takes 4.95% of every long-term gain at the top — moderate drag on what a realized return keeps.
IndianaThe state takes 3% of every long-term gain at the top — low drag on what a realized return keeps.
severe
Estate exposureDoes the state tax the estate below the federal threshold, and how steeply?
none
IllinoisA state estate tax exempts only $4M — far below the federal ~$14M; a cliff then taxes the whole estate, not just the excess; severe exposure at death that federal-only planning misses.
IndianaNo state estate or inheritance tax — only the federal estate tax reaches the estate.
moderate
Harvesting leverageHow much is a harvested loss worth here?
moderate
IllinoisA harvested loss is worth the 4.95% state rate it offsets, on top of federal — moderate harvesting leverage.
IndianaA harvested loss is worth the 3% state rate it offsets, on top of federal — moderate harvesting leverage.
high
Mobility valueHow much could a change of residency be worth?
low
IllinoisBoth the rate and the estate regime make relocation genuinely valuable — but domicile is a fact pattern, not a mailing address.
IndianaThe rate is modest — residency is unlikely to be the lever that moves the household's outcome.
low
Basis coordinationWhat basis-step-up opportunity does the marital-property regime create?
low
IllinoisCommon-law basis: only the decedent's half steps up at the first death — plan titling so the survivor is not left with low-basis lots.
IndianaCommon-law basis: only the decedent's half steps up at the first death — plan titling so the survivor is not left with low-basis lots.
Which coordination priorities change
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.
Only Illinois
Residency & domicile· advisor + CPA
Whether — and how — a change of domicile is worth pursuing, and the facts (days, home, ties) that make it real rather than nominal.
Estate structure· estate attorney
Whether the state's estate exposure warrants credit-shelter / QTIP titling or lifetime gifting to move value below the state threshold.
Shared
Loss harvesting· advisor + CPA
Setting a harvesting cadence that captures the state rate a banked loss offsets, sequenced against the state's loss-carryforward rules.
Asset location· advisor
Placing the high-turnover sleeve in tax-advantaged accounts so the state's rate falls on the least of the household's realized gains.
3%Loss treatment conforms to federal: capital losses net against gains and carry forward. Top effective long-term rate 3%. Quirk: + county tax; 2.95% in 2026.
Estate & inheritance
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)
No state estate or inheritance tax — only the federal estate tax applies.
in-stateOnly in-state municipal-bond interest escapes state tax; bonds from other states are taxed. The classic in-state muni preference that rewards a home-state ladder.
Illustrative coordination gap
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 ~$40,000/yr per $1M taxable in Illinois versus ~$39,000/yr in Indiana — the coordination gap between the two (about +4.0%/yr vs +3.9%/yr modeled). A hypothetical, illustrative figure; the household's own depends on bracket, holdings, and residency (see the full basis of the estimate below).
A difference between two states is a decision waiting to be coordinated.
Turn it into a sequenced operating plan for a move, or fold it into a household's standing coordination record.
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.
What changed
2026-07-07 — First law-review date and honest per-cell source labeling; primary-source citations verified for Illinois, California, New York, Texas, and Florida (more in progress).
2025 — Washington's 7% (+2.9%) excise on long-term capital gains reflected (enacted 2022).
2025 — New Hampshire's Interest & Dividends tax reflected as fully repealed, effective 2025.
2025 — Illinois estate-tax detail tracks the pending SB 2970 as of the review date.
Illustrative / hypothetical — not a real track record and not advice. The tax-management impact figure is a hypothetical, after-tax result from the retroactive application of a tax-management model to ~30 years of proxy-spliced market data on a single illustrative path; no client capital was invested, and hypothetical performance does not guarantee future results. Intended for sophisticated investors; it may not be relevant to your situation, and your actual figure depends on your own holdings, basis, and bracket. State tax facts reflect tax year 2025 and can change — confirm with a tax advisor. Driftwood Wealth is a registered investment adviser; Form ADV and Form CRS are available at adviserinfo.sec.gov.
DRIFTWOOD WEALTH · AUSTIN, TEXAS · FOUNDED 2024MODEL DATA AS OF JULY 2026 · FORM ADV & CRS AT ADVISERINFO.SEC.GOV
Driftwood. State tax law reflects 2025 tax-year law; last reviewed 2026-07-07. A comparison is a view of the reasoning graph — it authors no facts of its own.