The amendment is expected to have a significant impact on state revenue and the distribution of wealth. By elevating the exclusion limit, fewer estates will be subject to taxation, which may lead to a decrease in state tax revenue from these types of transfers. However, proponents suggest that the bill could stimulate economic activity by enabling family-owned businesses and farms to be passed down through generations without the financial burden of estate taxes.
House Bill 2993 amends the Illinois Estate and Generation-Skipping Transfer Tax Act by significantly increasing the exclusion amount applicable to estate taxes. The bill raises the exclusion threshold for persons dying on or after January 1, 2024, from $4,000,000 to $12,060,000. This change is set to take effect immediately upon the bill's passage. Supporters of the bill argue that increasing the exclusion amount will provide substantial relief to families inheriting estates and will encourage wealth retention within the state, particularly among middle and upper-middle-class families.
Despite the apparent benefits, there are notable points of contention surrounding HB2993. Critics argue that the increase in the exclusion amount primarily benefits the wealthy, allowing larger estates to escape taxation altogether. They contend that this could exacerbate existing inequalities in wealth distribution in Illinois. Additionally, there are concerns about the long-term fiscal implications for the state budget, particularly if the reduction in revenue from estate taxes is not offset by other forms of taxation or economic growth.
Overall, HB2993 represents a substantial shift in the structure of estate taxation in Illinois, aiming to provide greater financial leeway for heirs while also raising questions about the fairness of wealth distribution and state revenue sustainability. The outcomes of this bill will be closely watched as its implications unfold.