ESTATE TAX-EXCLUSION AMOUNT
Beginning January 1, 2026, the bill dictates that the exclusion amount shall be the greater of either the applicable exclusion amount under the Internal Revenue Code or the exclusion amount calculated for 2025 if the decedent's death occurred in that year. This provision aims to adjust the exclusion amount dynamically according to federal standards and inflation adjustments, potentially allowing higher value estates to avoid taxation. The immediate effective date of the amendments suggests a prompt transition in state-level estate tax calculations for future cases.
House Bill 4519 proposes amendments to the Illinois Estate and Generation-Skipping Transfer Tax Act. The legislation primarily addresses the exclusion amount for estate taxes based on the timing of the decedent's death. For deaths occurring between January 1, 2024, and December 31, 2025, the exclusion amount aligns with the applicable exclusion amount under the Internal Revenue Code, which is currently set at $4,000,000. This means that estates valued below this threshold would not be subject to Illinois estate taxes during this period.
Opponents may argue that while the bill could benefit larger estates by minimizing their tax burden, it could simultaneously reduce state revenues generated from estate taxes. Critics may also express concerns that this could promote wealth accumulation among affluent individuals and families, potentially widening the inequality gap. Proponents, however, might highlight the importance of aligning state tax laws with federal guidelines to simplify compliance and reduce bureaucratic burdens on grieving families who encounter tax liabilities.