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SB 3376

MARK-TO-MARKET TAX ACT

104th Regular Session Introduced by Javier Cervantes and 10 co-sponsors

Illinois bill requiring annual taxation of unrealized asset gains instead of only taxing gains when assets are sold.

Added as Co-Sponsor Sen. Napoleon Harris, III
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Bill Summary · SB 3376

Legislative bill overview

SB 3376 proposes implementing a mark-to-market taxation system in Illinois, which would require taxpayers to pay taxes on unrealized gains in assets (such as stocks, real estate, or other investments) annually, rather than only when those assets are sold. This represents a significant departure from Illinois's current realization-based tax system that only taxes gains when assets are actually sold.

Why is this important

Mark-to-market taxation could fundamentally change how wealth is taxed in Illinois and affect investment behavior. Proponents argue it would increase tax revenue and create a more equitable system where gains are taxed regardless of sale timing; opponents contend it could discourage investment, create liquidity problems for taxpayers who must pay taxes on paper gains without selling assets, and potentially conflict with federal tax law unless the state receives special authorization.

Potential points of contention

  • Liquidity concerns: Taxpayers would owe taxes on gains they haven't realized in cash, potentially forcing asset sales to pay tax bills
  • Economic competitiveness: Could drive high-net-worth individuals and businesses to relocate to states without mark-to-market taxation
  • Federal law compliance: Illinois may lack authority to implement this without federal approval, as it conflicts with existing federal tax treatment of unrealized gains
  • Small business impact: Family businesses and farms could face significant annual tax burdens on asset appreciation

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

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