NFIB Continues to Push for Illinois Estate Tax Reform
Although efforts to move estate tax reform in the recently concluded veto session were not successful, it will be a top priority for NFIB in the upcoming 2024 session.
During the 2023 session, Democratic state Senator David Koehler of Peoria introduced Senate Bill 2581 that would increase the estate tax exemption from the current $4 million to $12 million, mirroring the present federal exemption.
Illinois is one of only twelve states that imposes an Estate Tax; and of those, Illinois has the second lowest exemption amount at only $4 million. Illinois has failed to keep pace with federal IRS exemptions, inflation, and most estate tax treatment in other States.
The Estate Tax hits small family businesses and farms especially hard. Inherited small business assets are not cash windfall trust funds; they are often non-liquid agricultural land, property, and machinery. Oftentimes, inheriting family members do not have the liquid cash resources to pay the additional estate tax liabilities, on top of income taxes on these non-liquid assets. Consequently, next generation family members often must sell inherited assets to pay the estate tax liabilities; oftentimes dramatically upending or closing the small family business operations.
Illinois law must be made commensurate with the IRS and peer states and expand the Illinois Estate Tax Exemption to $12 million, from the current $4 million.