Bipartisan bills would ease ‘death tax’ on Illinois family farms
Selling family farmland to pay Illinois’ estate tax could end if a pair of bills take root in the General Assembly.
Family farms could receive some tax relief under a pair of new bills in the Illinois General Assembly.
Senate Bill 1742, introduced by state Sen. Scott Bennett, D-Champaign, would tie Illinois’ estate tax to the federal estate tax level, which currently levies the tax at $11.4 million. The estate tax, also called the death tax, is a tax on the value of an estate paid by someone who inherits money from the original owner. A companion bill, House Bill 3561, was also introduced in the House by state Rep. Monica Bristow, D-Godfrey.
The bills intend to save family farms. When the owner of a farm dies, the heirs are faced with a combined tax rate of up to 56 percent of the land’s value. The federal estate tax takes 40 percent and Illinois’ tax can range from 0.8 percent to 16 percent, according to the Tax Foundation.
Currently, Illinois taxes estates valued at $4 million or more, which would be roughly the value of only 500 acres of farmland. The federal tax starts on inheritance per person of $11.4 million or greater.
Illinois is one of 17 states, plus Washington, D.C., that collects either an estate or inheritance tax. Neighboring states of Wisconsin, Missouri, Michigan and Indiana don’t impose those taxes, and Indiana repealed its “death tax” in 2013.
States have been trending away from death taxes, with recent repeals in Tennessee, Delaware and even New Jersey. New Jersey and Illinois are often tied at the ugly extremes when ranked for taxing residents and fiscal irresponsibility.
Death taxes “have large compliance costs, have been shown to suppress entrepreneurship and are among the most harmful taxes to economic growth,” according to the Tax Foundation. Most states seem to have realized that.
Illinois lawmakers should ease this unnecessary burden on family farms by sending either SB 1742 or HB 3561 to the governor’s desk.