(The Center Square) – A bipartisan effort increasing the threshold for when the Illinois’ estate tax kicks in for family farms is underway.
The state’s current threshold for the so-called death tax is $4 million. Illinois Farm Bureau President Brian Duncan said the estate taxes on that when someone dies can crush a family farm.
“The unfortunate part of the farm family’s story is that the Illinois estate tax often forces family farms to sell part of their businesses every generation,” Duncan said during a news conference in Bloomington Wednesday. “Here’s the simple fact of the matter, the death of a loved one should not force families to give up the farm.”
Farmers across the state know someone or have themselves been impacted by the Illinois estate tax, Duncan said.
“Our incomes are very similar to other occupations like nurses, police officers and firefighters, but unlike people in those honorable professions, our ability to maintain an income for our family comes from the farm,” he said. “And unfortunately we’re often faced with the decision to have to sell off part of our business to meet the tax obligation.”
State Sen. Dave Koehler’s measure, Senate Bill 2921, would increase the threshold that’s taxed from $4 million to $6 million.
“If you take a family that has say 350 acres and somebody dies and they have to pay the estate tax, what happens in a farm of say just over 300 to 350 acres may produce $25,000, $30,000 of income. That’s not a lot. But you know what, the estate tax on that is. It’s going to be almost $5 million, I mean that’s what the value is. And so that’s going to be taxed,” said Koehler, D-Peoria. “This bill changes that and it changes that in a way that it should have changed long ago.”
About a dozen legislators for both parties and both chambers of the Illinois General Assembly stood together Wednesday in support of the measure. State Sen. Sue Rezin, R-Morris, said the change is needed.
“The inheritance tax on that couple hundred acres is a huge burden,” Rezin said. “And like my colleagues have said … you will have to sell the family farm. They are land rich but cash poor.”
Koehler said his measure will only address family farms, not other small businesses, because that would have meant fewer tax dollars to the state’s coffers.
“The price tag on that was pretty enormous,” Koehler said. “And so I got together with the farm bureau and we said let’s try to do something that really affects an area that is very important … let’s go specifically after what we want and what we want is we want relief for farm families. We want to preserve the family farm as a way of life in Illinois.”
A similar measure, House Bill 4600, has also been filed.
The legislature returns Tuesday.
