BLOOMINGTON, Ill. — A group of bipartisan state lawmakers gathered at the Illinois Farm Bureau on January 31 to laud the introduction of legislation that would update the Illinois estate tax for typical family farms. The Family Farm Preservation Act, introduced in the state Senate by David Koehler (D-Peoria) and in the House by Rep. Sharon Chung (D-Bloomington), addresses 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. 

“We hear these stories all the time. Someone dies as a farmer and their family has to sell the farm just to pay the estate taxes. That really threatens the fabric of Illinois,” Koehler said in a media interview following the announcement. “Farms are what we are made of, and over 96 percent of the farms in Illinois are family farms. Unless we want to see a big rise in corporate farming, we need to protect the families.”

The Peoria Democrat went on to say that a common misconception among consumers is that Illinois farmers are disproportionately wealthy. He said the typical 1,300 acre farm produces revenue of around $90,000 to $100,000, more in line with a mid-range income. Meanwhile, a farm just one-fourth of that size can be valued at as much as $5 million upon transfer of ownership — while producing only around $25,000 in revenue.

“The threshold is now at $4 million, but that’s a little deceiving. If you have a farm that is valued at $3,999,999, you don’t pay any estate taxes. If it’s valued at ($2 more), you pay the estate taxes on the whole amount. What we’re doing is raising the threshold to $6 million, but we are saying that is going to be a true exemption; you don’t pay any tax until you reach $6,000,001,” Koehler said.

The exemption would be indexed for inflation, mirroring federal guidelines. On the federal level, the 2017 Tax Cuts and Jobs Act nearly doubled the lifetime estate and gift tax exemption from $5.6 million to $11.18 million for individuals, indexed for inflation after 2018. The indexed exemption rose to $12.92 million ($25.84 million for married couples) in 2023, but barring congressional action, the exemption is expected to return to $6 to $7 million ($14 million for married couples) in 2026. This would put Illinois in line with federal estate tax exemption amounts by 2026 if the bill is passed.

“Passing on a farm to heirs takes a lot of time, money and planning,” said Chung. “We’re hoping this (bill) brings a lot of relief to family farms and helps ensure family farms stay within families. Threshold in this state is quite low, and this law will bring Illinois in line with federal standards within the next two years.”

Lawmakers showing support for the bill include Rep. Charlie Meier, R-Okawville, a working farmer. During the press event, Meier shared examples of how the tax has impacted his own farming community.

“For decades I have watched family farms get sold because they have to pay an inheritance tax. ... People think we are rich because we have this huge asset of farmland,” he said. “That’s not farmland to us, that’s a member of our family. That member of our family has taken care of our family for generations. ... That’s what this bill is about — future generations being able to farm that land, keeping America the cheapest fed nation in the world and keeping the family farm going,” he said. 

IFB President Brian Duncan said the farm bureau fully supports the legislation, which is currently under review by the Senate Assignments Committee and House Rules Committee. “Illinois Farm Bureau is proud to support the Family Farm Preservation Act because our policy supports the preservation of family farms and this is a bipartisan effort to keep farm families on the family farm. We are grateful and excited to see members from all four caucuses (lend their support for the legislation),” he said. 

Other members of the Illinois General Assembly attending the press event included Sen. Mike Halpin (D-Rock Island), Sen. Patrick Joyce (D- Essex), Sen. Christopher Belt (D-Swansea), Sen. Sue Rezin (R- Morris), Rep. Norine Hammond (R-Macomb), Sen. Tom Bennett (R- Gibson City), Rep. Stephanie Kifowit (D-Oswego) and Rep. Jason Bunting (R-Emington).