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HB 2677

ESTATE TAX-SPECIAL USE

104th Regular Session Introduced by Harry Benton and 33 co-sponsors

Illinois estate tax for farms doubles the exemption to 6 million, with annual inflation indexing and a special-use valuation to reduce tax for qualified farm property.

Added Co-Sponsor Rep. Mary Gill
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Bill Summary · HB 2677

Summary — HB 2677 (Estate Tax — Special Use)

Note: The bill packet provided includes text from two different HB 2677s (an Arizona bill on middle‑school CTE and an Illinois bill on estate tax). This summary focuses on the Illinois measure titled “Estate Tax — Special Use,” which matches the title, sponsors and legislative history supplied.

Purpose

HB 2677 amends the Illinois Estate and Generation‑Skipping Transfer Tax Act to change how estates that contain “qualified farm property” are treated for state estate tax purposes. The bill aims to reduce state estate tax liability for such estates by increasing an exemption amount, allowing a special‑use valuation for farm property for state purposes, and adjusting related spousal unused exclusion computations.

Key provisions

  • Estates that include qualified farm property receive a larger exemption when calculating the State Death Tax Credit:
    • Sets a base exemption amount of $6,000,000 (replacing a prior $4,000,000 exclusion reference).
    • The exemption is indexed annually to inflation using the Consumer Price Index (CPI); indexing begins January 1, 2026 and on January 1 of each subsequent year.
  • Special‑use valuation:
    • Provides a “special use valuation” rule for qualified farm property so that its value for Illinois estate tax purposes is calculated “without regard to certain limitations under the Internal Revenue Code.” (Text is truncated; exact IRC limitations not fully shown in the available excerpt.)
  • Deceased spousal unused exclusion:
    • Modifies how the deceased spousal unused exclusion amount is calculated for estates that qualify under the special‑use valuation provisions (details provided in the bill, some text truncated).
  • Definitions:
    • Revises or clarifies the definition of “qualified heir” to align with Section 2032A(e)(1) of the Internal Revenue Code.
  • Administrative detail:
    • The Attorney General is directed to publish annual multipliers used to calculate indexed deceased spousal unused exemption amounts.

Who is affected

  • Primary: Estates that include qualified farm property (farmers and heirs).
  • Secondary: Executors, estate planners, probate courts, and the Illinois Department of Revenue (administration & enforcement).
  • Potential fiscal impact: Reduced state estate tax receipts from qualifying estates (extent depends on number/value of qualifying farm estates and indexing).

Procedural status (selected)

  • Introduced in early February 2025 by Rep. Sharon Chung (with many co‑sponsors).
  • Passed the House and transmitted to the Senate; referred to Revenue & Finance Committee and to Tax Policy subcommittee actions are recorded.
  • Placed on General State Calendar (May 14, 2025). Companion bill: SB 2729.

Notes and caveats

  • Some portions of the provided bill text were truncated; specific technical language (e.g., exact IRC limitations being disregarded, precise mechanics for spousal unused exclusion calculation) are not fully visible. This summary reflects available material; consult the full enrolled bill text for definitive legal language and implementation details.

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

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