One of the hot legislative topics this year has been the idea of raising the Estate Tax Exemption limit—protecting more small businesses and farms from the so-called “death tax.” While the federal exemption shields estates up to $13.99 million, the Illinois exemption has remained frozen at $4 million since 2003. If it had been adjusted for inflation, it would now be over $7 million.
While $4 million may sound like a large sum, it’s important to remember that these taxes have already been paid once (or more) on those monies. Additionally, for many small farms and businesses, heirs are often forced to sell off portions of the inherited estate just to cover the death tax. That’s why the Illinois Farm Bureau made raising the exemption to $6 million one of its top priorities this spring session.
Several bills were introduced to adjust the estate tax exemption, but none even received a committee hearing in the State Senate. With little appetite from the majority party to cut recent spending increases, the effort stalled for yet another year.
At a bare minimum, the estate tax exemption should be tied to inflation—and so should taxpayers’ individual deductions on their state taxes. I even introduced legislation to address that issue, but it too was blocked by the Democrats. Taxes keep rising, while exemptions remain frozen. This is something we need to fix in Illinois—to protect both individuals and small businesses.