Bill Text: IL SB2921 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Makes certain changes concerning estates that contain qualified farm property. Provides that, for the purposes of calculating the State Death Tax Credit, those estates are subject to an exemption of $6,000,000 (rather than an exclusion amount of $4,000,000), which shall be deducted from the net estate value after the net estate value is computed in accordance with the Act. Provides that the exemption shall be adjusted each year according to the increase in the Consumer Price Index. Makes changes concerning the calculation of the deceased spousal unused exclusion amount for those estates. 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. Makes changes concerning the definition of "qualified heir" to provide that a decedent's brother, sister, uncle, aunt, niece, nephew, or first cousin is also included.

Spectrum: Bipartisan Bill

Status: (Introduced) 2024-09-11 - Added as Co-Sponsor Sen. Mike Porfirio [SB2921 Detail]

Download: Illinois-2023-SB2921-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB2921 Introduced 1/26/2024, by Sen. David Koehler - Paul Faraci SYNOPSIS AS INTRODUCED:
35 ILCS 405/2 from Ch. 120, par. 405A-2
35 ILCS 405/5 from Ch. 120, par. 405A-5
Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Makes certain changes concerning estates that contain qualified farm property. Provides that, for the purposes of calculating the State Death Tax Credit, those estates are subject to an exemption of $6,000,000 (rather than an exclusion amount of $4,000,000), which shall be deducted from the net estate value after the net estate value is computed in accordance with the Act. Provides that the exemption shall be adjusted each year according to the increase in the Consumer Price Index. Makes changes concerning the calculation of the deceased spousal unused exclusion amount for those estates. 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. Makes changes concerning the definition of "qualified heir" to provide that a decedent's brother, sister, uncle, aunt, niece, nephew, or first cousin is also included.
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A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Estate and Generation-Skipping
Transfer Tax Act is amended by changing Sections 2 and 5 as
follows:
(35 ILCS 405/2) (from Ch. 120, par. 405A-2)
Sec. 2. Definitions.
"Federal estate tax" means the tax due to the United
States with respect to a taxable transfer under Chapter 11 of
the Internal Revenue Code.
"Federal generation-skipping transfer tax" means the tax
due to the United States with respect to a taxable transfer
under Chapter 13 of the Internal Revenue Code.
"Federal return" means the federal estate tax return with
respect to the federal estate tax and means the federal
generation-skipping transfer tax return with respect to the
federal generation-skipping transfer tax.
"Federal transfer tax" means the federal estate tax or the
federal generation-skipping transfer tax.
"Illinois estate tax" means the tax due to this State with
respect to a taxable transfer.
"Illinois generation-skipping transfer tax" means the tax

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due to this State with respect to a taxable transfer that gives
rise to a federal generation-skipping transfer tax.
"Illinois transfer tax" means the Illinois estate tax or
the Illinois generation-skipping transfer tax.
"Internal Revenue Code" means, unless otherwise provided,
the Internal Revenue Code of 1986, as amended from time to
time.
"Non-resident trust" means a trust that is not a resident
of this State for purposes of the Illinois Income Tax Act, as
amended from time to time.
"Person" means and includes any individual, trust, estate,
partnership, association, company or corporation.
"Qualified heir" means a qualified heir as defined in
Section 2032A(e)(1) of the Internal Revenue Code.
"Resident trust" means a trust that is a resident of this
State for purposes of the Illinois Income Tax Act, as amended
from time to time.
"State" means any state, territory or possession of the
United States and the District of Columbia.
"State tax credit" means:
(a) For persons dying on or after January 1, 2003 and
through December 31, 2005, an amount equal to the full credit
calculable under Section 2011 or Section 2604 of the Internal
Revenue Code as the credit would have been computed and
allowed under the Internal Revenue Code as in effect on
December 31, 2001, without the reduction in the State Death

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Tax Credit as provided in Section 2011(b)(2) or the
termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
increased applicable exclusion amount through December 31,
2005.
(b) Except as provided in subsection (c), for For persons
dying after December 31, 2005 and on or before December 31,
2009, and for persons dying after December 31, 2010, an amount
equal to the full credit calculable under Section 2011 or 2604
of the Internal Revenue Code as the credit would have been
computed and allowed under the Internal Revenue Code as in
effect on December 31, 2001, without the reduction in the
State Death Tax Credit as provided in Section 2011(b)(2) or
the termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
exclusion amount of only (i) $2,000,000 for persons dying
prior to January 1, 2012, (ii) $3,500,000 for persons dying on
or after January 1, 2012 and prior to January 1, 2013, and
(iii) $4,000,000 for persons dying on or after January 1,
2013, and with reduction to the adjusted taxable estate for
any qualified terminable interest property election as defined
in subsection (b-1) of this Section.
(b-1) The person required to file the Illinois return may
elect on a timely filed Illinois return a marital deduction

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for qualified terminable interest property under Section
2056(b)(7) of the Internal Revenue Code for purposes of the
Illinois estate tax that is separate and independent of any
qualified terminable interest property election for federal
estate tax purposes. For purposes of the Illinois estate tax,
the inclusion of property in the gross estate of a surviving
spouse is the same as under Section 2044 of the Internal
Revenue Code.
(c) For persons dying on or after the effective date of
this amendatory Act of the 103rd General Assembly whose estate
contains property that qualifies for the special use valuation
under subsection (d) of Section 5 of this Act, whether the
person who is required to file an Illinois return makes a
special use valuation election or not, an amount equal to the
full credit calculable under Section 2011 or 2604 of the
Internal Revenue Code as the credit would have been computed
and allowed under the Internal Revenue Code on December 31,
2001, without the reduction in the State Death Tax Credit as
provided in Section 2011(b)(2) of the Internal Revenue Code or
the termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, plus any deceased spousal
unused exclusion amount, but recognizing the exemption amount
calculated under this subsection (c), which shall be deducted
from the net estate value after the net estate value is
computed in accordance with this Act, and with reduction to

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the adjusted taxable estate for any qualified terminable
interest property election, as defined in subsection (b-1) of
this Section. In no event shall the exemption under this
Section reduce the estate's value to less than zero.
For persons dying on or after the effective date of this
amendatory Act of the 103rd General Assembly and before
January 1, 2025 whose estates qualify under this subsection
(c), the exemption amount under this subsection (c) is
$6,000,000. On January 1, 2025, and on January 1 of each
subsequent year, the exemption amount under this subsection
(c) shall be the exemption amount for the previous calendar
year, multiplied by one plus the percentage increase, if any,
in the Consumer Price Index for the 12 months ending in
September of the calendar year immediately preceding the
calendar year in which the increase takes place, rounded to
the nearest whole dollar.
For the purposes of this subsection (c), with respect to a
surviving spouse who dies on or after the effective date of
this amendatory Act of the 103rd General Assembly and whose
deceased spouse died on or after the date that is 24 months
prior to the effective date of this amendatory Act of the 103rd
General Assembly, the term "deceased spousal unused exclusion
amount" means the excess of the applicable exclusion amount of
the last deceased spouse of the surviving spouse over the
amount with respect to which the tentative maximum State Death
Tax Credit would have been determined under Section 2011 or

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2604 of the Internal Revenue Code on December 21, 2001. A
deceased spousal unused exclusion amount may not be taken into
account by the surviving spouse under this subsection unless
the person required to file the Illinois estate tax return for
the estate of the deceased spouse files an Illinois estate tax
return, including an amended return for a deceased spouse
dying prior to the effective date of this amendatory Act of the
103rd General Assembly, on which such amount is computed and
makes an election on such return that the amount may be so
taken into account. Such an election, once made, shall be
irrevocable. No election may be made under this subsection if
the return for the deceased spouse is filed after the time
prescribed by law, including extensions, for filing such
return.
As used in this subsection (c), "Consumer Price Index"
means the index published by the Bureau of Labor Statistics of
the United States Department of Labor that measures the
average change in prices of goods and services purchased by
all urban consumers, United States city average, all items,
1982-84 = 100.
(d) In the case of any trust for which a State or federal
qualified terminable interest property election is made, the
trustee may not retain non-income producing assets for more
than a reasonable amount of time without the consent of the
surviving spouse.
(e) As used in this Act:

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"Taxable transfer" means an event that gives rise to a
state tax credit, including any credit as a result of the
imposition of an additional tax under Section 2032A(c) of the
Internal Revenue Code.
"Transferee" means a transferee within the meaning of
Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
Code.
"Transferred property" means:
(1) With respect to a taxable transfer occurring at
the death of an individual, the deceased individual's
gross estate as defined in Section 2031 of the Internal
Revenue Code.
(2) With respect to a taxable transfer occurring as a
result of a taxable termination as defined in Section
2612(a) of the Internal Revenue Code, the taxable amount
determined under Section 2622(a) of the Internal Revenue
Code.
(3) With respect to a taxable transfer occurring as a
result of a taxable distribution as defined in Section
2612(b) of the Internal Revenue Code, the taxable amount
determined under Section 2621(a) of the Internal Revenue
Code.
(4) With respect to an event which causes the
imposition of an additional estate tax under Section
2032A(c) of the Internal Revenue Code, the qualified real
property that was disposed of or which ceased to be used

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for the qualified use, within the meaning of Section
2032A(c)(1) of the Internal Revenue Code.
"Trust" includes a trust as defined in Section 2652(b)(1)
of the Internal Revenue Code.
(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
97-636, eff. 6-1-12.)
(35 ILCS 405/5) (from Ch. 120, par. 405A-5)
Sec. 5. Determination of tax situs and valuation.
(a) Illinois estate tax.
(1) For purposes of the Illinois estate tax, in the
case of a decedent who was a resident of this State at the
time of death, all of the transferred property has a tax
situs in this State, including any such property held in
trust, except real or tangible personal property
physically situated in another state.
(2) For purposes of the Illinois estate tax, in the
case of a decedent who was not a resident of this State at
the time of death, the transferred property having a tax
situs in this State, including any such property held in
trust, is only the real estate and tangible personal
property physically situated in this State.
(b) Illinois generation-skipping transfer tax.
(1) For purposes of the Illinois generation-skipping
transfer tax, all transferred property from or in a
resident trust has a tax situs in this State, including

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any such property held in trust, except real or tangible
personal property physically situated in another state on
the date that the taxable transfer occurs.
(2) For purposes of the Illinois generation-skipping
transfer tax, none of the transferred property from or in
a non-resident trust has a tax situs in this State, except
that portion of the transferred property that is real or
tangible personal property physically situated in this
State, including any such property held in trust, on the
date that the taxable transfer occurs.
(c) Valuation. Except as otherwise expressly provided, for
purposes of this Act, the gross value of transferred property
shall be its value as finally determined for purposes of the
federal transfer tax, undiminished by any mortgages, liens or
other encumbrances upon such transferred property for which
the decedent was personally liable.
(d) Special Use Valuation. For purposes of the Illinois
estate tax, the gross value of transferred property used for
farming purposes that constitutes "qualified real property"
allowed under Section 2032A of the Internal Revenue Code, as
in effect on January 1, 2024, for which an election has been
made by the person required to file the Illinois return shall
be its value as determined under Section 2032A without regard
to any limitation on the reduction in the fair market value. In
addition to a qualified heir or member of the family allowed
under Section 2032A of the Internal Revenue Code, a decedent's

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