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SB 1735

ESTATE TAX-PHASE OUT

104th Regular Session Introduced by Chris Balkema and 6 co-sponsors

Illinois phases out estate and GST taxes, reducing rates from 2026 to zero by 1/1/2030, repealing the act on 1/1/2031 and increasing net inheritances.

Added as Co-Sponsor Sen. Chris Balkema
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Bill Summary · SB 1735

SB 1735 — “Estate Tax — Phase Out” (Illinois) — Summary

Status: Passed both chambers and signed by the Governor (June 2025). Effective immediately upon becoming law.
Primary sponsor: Sen. Jil Tracy. Co‑sponsors: Seth Lewis, Patrick J. Joyce, Terri Bryant, Donald P. DeWitte, Sally J. Turner, Chris Balkema. Companion: HB 3250.

Purpose / Intent

Amend the Illinois Estate and Generation‑Skipping Transfer (GST) Tax Act to phase down and ultimately eliminate the Illinois estate tax and the state generation‑skipping transfer tax over a multi‑year schedule, and repeal the Act shortly thereafter.

Key provisions

  • Amends Sections 3 and 4 of the Illinois Estate and Generation‑Skipping Transfer Tax Act and adds a new Section 19 (repeal).
  • Implements a stepped reduction of the state estate tax and Illinois GST tax for deaths and transfers occurring after specified dates:
    • For estates of persons dying on or after January 1, 2026 and before January 1, 2027: tax amount = baseline (current statutory amount) × 0.8 (i.e., 80%).
    • For deaths occurring between Jan 1, 2027 and Jan 1, 2028: tax = baseline × 0.6.
    • For deaths between Jan 1, 2028 and Jan 1, 2029: tax = baseline × 0.4.
    • For deaths between Jan 1, 2029 and Jan 1, 2030: tax = baseline × 0.2.
    • No Illinois estate tax is imposed for persons dying on or after January 1, 2030.
  • Parallel schedule for Illinois generation‑skipping transfer tax based on the date the transfer occurs (reductions beginning Jan 1, 2026, with full repeal for transfers on or after Jan 1, 2030).
  • Repeal clause: the Act (i.e., the Illinois Estate & GST Tax Act as amended) is repealed on January 1, 2031.
  • Effective date: the act takes effect upon becoming law.

Who is affected

  • Estates of decedents with a situs in Illinois (executors, beneficiaries).
  • Persons making generation‑skipping transfers subject to Illinois GST tax.
  • Estate planners, probate courts, and Illinois Department of Revenue (administration and compliance).
  • State finances: phased reduction in estate/GST tax receipts, culminating in elimination of these state taxes for qualifying deaths/transfers on/after 1/1/2030.

Timing / Implementation notes

  • Reductions apply based on the date of death (for estate tax) or the date of the transfer (for GST tax), starting January 1, 2026.
  • Full elimination of these Illinois taxes for deaths/transfers on or after January 1, 2030.
  • Complete statutory repeal of the Act on January 1, 2031.
  • Because the bill changes how the state tax credit and state tax calculations are carried out, executors and taxpayers should consult updated filing instructions and the Department of Revenue guidance after the law’s effective date.

Practical implications (high level)

  • Gradual reduction and final elimination of Illinois estate and GST taxes increases net inheritances for affected estates and may change estate‑planning behavior.
  • The state will forgo progressively larger amounts of revenue under the phase‑out; the bill does not include offsets in this text.
  • Executors, advisors, and taxpayers should track the decedent’s date of death or transfer date to determine the applicable percentage and compliance requirements.

Compiled from official sources — confirm details with the bill’s official record.

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