Farm estates could use a separate Illinois tax valuation election

Qualifying farm estates could use a $6 million exemption when calculating Illinois estate tax. This applies to estates of people who die on or after January 1, 2027, and make the Illinois special valuation election for qualifying farm property. The estate must contain property eligible for the special farm valuation, and the Illinois return filer must make that election. The exemption is subtracted after the net estate value is calculated and cannot reduce that value below zero. The $6 million base applies to deaths from January 1 through December 31, 2027. The base would be adjusted each January 1 starting in 2028.

The Illinois return filer could elect to value qualifying farm property without the federal limit on the value reduction. This applies to qualifying farm property included in an Illinois estate tax return. The property must be qualifying real property used for farming under the cited federal rule, and the Illinois election is separate from any federal election. Certain descendants of the decedent’s grandparent, including legally adopted descendants, would also count as qualified heirs or family members. The bill states that it would take effect January 1, 2027.

A surviving spouse could add an indexed amount of a deceased spouse’s unused exemption to the base exemption. This applies to a surviving spouse whose estate qualifies for the Illinois exemption tied to special farm valuation. The last deceased spouse must have died on or after January 1, 2027, and the surviving spouse’s estate must qualify for the special farm valuation exemption. The deceased spouse’s return must be filed on time and include the election to carry forward the unused amount; that election cannot be withdrawn. The amount would increase each January 1 after the deceased spouse’s death, based on inflation.