(The Center Square) – Illinois is known for having high property and corporate taxes, but it is also one of the few states that imposes estate taxes.
The estate tax is imposed on a decedent’s estate, like a family farm, before distribution to heirs. As a result, beneficiaries typically sell off parts of the farm or incur tremendous debt to pay the tax.
“The state of Illinois is one of only 12 states that has an estate tax so these young families and kids that one day want to take over the family farm, they’re greatest hurdle is the regressive estate tax,” said state Sen. Andrew Chesney, R-Freeport, during Ag Day at the State Capitol.
Chesney is calling for the passage of legislation that would raise the threshold exemption for paying the tax to $6 million from $4 million. One measure, House Bill 2677, also provides for a special use valuation to provide that the value of the qualified farm property shall be calculated without regard to certain limitations under the Internal Revenue Code. The Illinois Farm Bureau is supporting the legislation.
Gov. J.B. Pritzker said any changes to the estate tax would create a hole in the state budget.
“A few hundred million dollars of revenue to the state so if he’s able to come with his ideas about how to pay for it, then we ought to talk about it,” said Pritzker.
Reforming Illinois’ estate tax is not a new notion. In 2023, state Sen. Jil Tracy, R-Quincy, introduced legislation that would have amended the Illinois Estate and Generation-Skipping Transfer Tax Act to eliminate the state estate tax for persons dying on or after the effective date of the new law or for transfers made on or after the effective date. The measure never advanced out of committee.
Brian Duncan, president of the Illinois Farm Bureau, said 96% of farms in the state are family-owned and raising the estate tax threshold would help keep that intact.
“Passing on the family farm is not just about continuing the business, it’s about preserving family heritage and a way of life,” said Duncan.
