By Illinois Radio Network
SPRINGFIELD – An Illinois lawmaker wants to realign Illinois’ tax on inheritance to federal thresholds, something long sought by family farmers.
Currently, Illinois imposes an estate tax, sometimes called a “death tax,” of up to 16 percent. Combined with a top federal rate of 40 percent, some heirs face a tax of up to 56 percent, but the federal estate tax kicks in at just under $12 million while Illinois’ estate tax applies to any inherited value above $4 million.
That’s why state Rep. Mike Murphy said he wants to bring Illinois back to using the same estate value threshold as the federal government.
“The estate tax is one of the reasons we’re losing the family farm,” he said.
Farm families, if they haven’t spent the money on an estate tax attorney, can be forced to sell off a portion of the family farm or take out loans to pay off an estate tax bill. A 500-acre farm valued at $10,000 an acre would, according to the Illinois Attorney General’s calculator, pay an estimated $285,714 in taxes to the state. Because inherited farms often come with other assets such as farm implements and structures that all carry value, the effect would be greater or be triggered at a lower acreage. The average land price for high-productivity soil is more than 10,000 per acre in central Illinois, according to the Illinois Farm Bureau.
Illinois and eleven other states and the District of Columbia levy an estate tax. Six states have an inheritance tax. Illinois Attorney General Kwame Raoul’s office collected $315 million in estate tax revenues in 2018.
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