BLOOMINGTON, Ill. – The 104th Illinois General Assembly failed to advance any new legislation regarding the Illinois state’s estate transition tax by the May 31 end of the spring legislative session, much to the disappointment of many in the farming community who have been lobbying for reform for years.

The Family Farm Preservation Act (SB 2921 and HB 4600), introduced in the state Senate by David Koehler (D-Peoria) and in the House by Rep. Sharon Chung (D-Bloomington) in 2024, addressed the discrepancy between escalating farm estate evaluations and annual farm income by raising the state’s estate tax exemption from $4 million to $6 million, with adjustments for inflation. It was among a myriad of bills that sought to adjust the state’s estate tax exemption, ranging from efforts to lower the amount to $2 million to a hike of more than $10 million, according to Andrew Larson, director of government relations and strategy for the Illinois Soybean Association (ISA). The organization has been supporting estate transition tax and property tax reform for around two decades.

“It was a crazy, crazy period in Springfield at the end of the (spring session), which, as many statehouse insiders have said, felt like five months crammed into five days,” said Larson, describing a near-chaotic wrap up to the spring legislative session in which the Illinois General Assembly reached an 11th-hour agreement on a balanced state budget.

As for estate tax reform, “There were several progressive legislators who wanted to decrease the overall estate tax exclusion from the $4 million threshold down to a $2 million threshold. There were prominent voices in the majority who were advocating for more revenue from estate taxes, while Republicans had bills that would transfer from an exemption to an exclusion and raise that to $10 million or $12 million a year,” Larson reported. 

The ISA and its political arm, Illinois Soybean Growers, are advocating for a paring down of the state’s complicated 20-bracket Illinois tax code system to just four brackets, along with a progressive-flat tax structure to simplify estate planning and tax compliance. ISA’s proposed new tax brackets are:

- 5 percent for estates between $4 million and $10 million

- 10 percent for estates between $10 million and $20 million

- 16 percent for estates between $20 million and $25 million

- 22 percent for estates over $25 million

“The Family Farm Preservation Act applied only to agricultural land, and has some regulatory mechanisms in it that attempt to certify that the land remains in farming for a certain amount of time. There are a lot of questions and concerns from a number of farmers about how that bill would actually work if it were to be enacted into law. It’s a very complex piece of legislation,” Larson said.

“Our organization, based on conversations with farmer-leaders, has worked to find ways to address the estate tax issue in a more across-the-board way that would apply to all Illinois estates. We are doing so in a way that is hopefully revenue-neutral, because with the budget situation it is incredibly unlikely the legislature would approve a plan to reduce the amount of revenue the estate tax brings into the state.”

Analysts who conducted a study for the Illinois Farm Bureau (IFB) estimate that a transition to a $6 million exemption could cost the state around $20 million per year in lost tax revenue. Still, the IFB shares ISA’s support for estate tax reform for Illinois farmers.

“We have been advocating for changing the state estate tax for many years,” said Kevin Semlow, IFB director of state legislative affairs, in a news release. “No matter the size of a family farm, farmers are faced with a tough decision of having to sell off their land and equipment to make the tax payment which makes it very difficult for the family farm to survive.”

Larson said there has been positive “momentum” gathering for estate tax reform based on recent conversations with agricultural stakeholders and the Illinois Attorney General’s Office. “We hope to continue to promote these discussions over the coming year to find ways we can pass state estate tax relief, particularly to those estates that are transferring small businesses between generations, by reducing those tax burdens they face passing an estate from generation to generation,” he said. “I know there will be a lot more conversations coming over the next few months and the next year, but we feel that any plan has to make fiscal sense for the state and has to simplify the estate tax code. We are overdue for conversations about making the estate tax clearer in Illinois.”