Bill Text: IL SB2038 | 2025-2026 | 104th General Assembly | Introduced

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Bill Title: Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that, for persons dying on or after January 1, 2026, the amount of the Illinois estate tax shall be the amount of the Illinois taxable estate, multiplied by the Illinois estate tax rate. Sets forth the estate tax rate. Provides that the "Illinois taxable estate" means the decedent's federal gross estate, subject to certain modifications, including a deduction in the amount of $4,000,000. Makes conforming changes with respect to the generation-skipping transfer tax. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2025-02-06 - Referred to Assignments [SB2038 Detail]

Download: Illinois-2025-SB2038-Introduced.html

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104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 SB2038 Introduced 2/6/2025, by Sen. Celina Villanueva SYNOPSIS AS INTRODUCED:
35 ILCS 405/2 from Ch. 120, par. 405A-2
35 ILCS 405/3 from Ch. 120, par. 405A-3
35 ILCS 405/4 from Ch. 120, par. 405A-4
Amends the Illinois Estate and Generation-Skipping Transfer Tax Act. Provides that, for persons dying on or after January 1, 2026, the amount of the Illinois estate tax shall be the amount of the Illinois taxable estate, multiplied by the Illinois estate tax rate. Sets forth the estate tax rate. Provides that the "Illinois taxable estate" means the decedent's federal gross estate, subject to certain modifications, including a deduction in the amount of $4,000,000. Makes conforming changes with respect to the generation-skipping transfer tax. Effective immediately.
LRB104 11647 HLH 21736 b
A BILL FOR
SB2038 LRB104 11647 HLH 21736 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Estate and Generation-Skipping
Transfer Tax Act is amended by changing Sections 2, 3, and 4 as
follows:
(35 ILCS 405/2) (from Ch. 120, par. 405A-2)
Sec. 2. Definitions.
"Exemption amount" means, for persons dying on or after
January 1, 2026 and for taxable transfers occurring on or
after January 1, 2026, $4,000,000.
"Federal estate tax" means the tax due to the United
States with respect to a taxable transfer under Chapter 11 of
the Internal Revenue Code.
"Federal generation-skipping transfer tax" means the tax
due to the United States with respect to a taxable transfer
under Chapter 13 of the Internal Revenue Code.
"Federal return" means the federal estate tax return with
respect to the federal estate tax and means the federal
generation-skipping transfer tax return with respect to the
federal generation-skipping transfer tax.
"Federal transfer tax" means the federal estate tax or the
federal generation-skipping transfer tax.

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"Illinois estate and generation-skipping transfer tax
rate" means:
(1) in the case of the Illinois estate tax:
(A) if the decedent's Illinois taxable estate is
$6,000,000 or less, 5%;
(B) if the decedent's Illinois taxable estate
exceeds $6,000,000 but does not exceed $16,000,000,
10%;
(C) if the decedent's Illinois taxable estate
exceeds $16,000,000 but does not exceed $21,000,000,
16%; and
(D) if the decedent's Illinois taxable estate
exceeds $21,000,000, 22%.
(2) in the case of the Illinois generation-skipping
transfer tax:
(A) if the amount by which the taxable transfer
exceeds the exemption amount is $6,000,000 or less,
5%;
(B) if the amount by which the taxable transfer
exceeds the exemption amount exceeds $6,000,000 but
does not exceed $16,000,000, 10%;
(C) if the amount by which the taxable transfer
exceeds the exemption amount exceeds $16,000,000 but
does not exceed $21,000,000, 16%; and
(D) if the amount by which the taxable transfer
exceeds the exemption amount exceeds $21,000,000, 22%.

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"Illinois estate tax" means the tax due to this State with
respect to a taxable transfer.
"Illinois generation-skipping transfer tax" means the tax
due to this State with respect to a taxable transfer that gives
rise to a federal generation-skipping transfer tax.
"Illinois taxable estate" means the decedent's federal
gross estate, as provided under Section 2031 of the Internal
Revenue Code, without regard to whether the estate is subject
to the federal estate tax, modified as follows:
(1) the decedent's federal gross estate shall be
increased by:
(A) the value of any property in which the
decedent had a qualifying income interest for life and
for which an election was made under subsection (b-1)
of this Section for Illinois estate tax purposes but
was not made for federal estate tax purposes; and
(B) the aggregate amount of taxable gifts, as
defined in section 2503 of the Internal Revenue Code,
made by the decedent within 3 years of the date of
death; and
(2) the decedent's federal gross estate shall be
decreased by:
(A) the exemption amount;
(B) the deductions found in sections 2053, 2054,
2055, 2056, and 2056A of the Internal Revenue Code;
and

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(C) the marital deduction for qualified terminable
interest property available for elections made
pursuant to subsection (b-1) of this Section.
For the purposes of subparagraph (B) of paragraph (1) of
this definition, the amount of the addition equals the value
of the gift under section 2512 of the Internal Revenue Code and
excludes any value of the gift included in the federal taxable
estate or the value of any gift with a non-Illinois situs. The
tax situs of a gift of real or tangible personal property shall
be the location of the real or tangible personal property at
the time the gift was given. The tax situs of intangible
personal property shall be the state in which the decedent
resided at the time the gift was given.
"Illinois transfer tax" means the Illinois estate tax or
the Illinois generation-skipping transfer tax.
"Internal Revenue Code" means, unless otherwise provided,
the Internal Revenue Code of 1986, as amended from time to
time.
"Non-resident trust" means a trust that is not a resident
of this State for purposes of the Illinois Income Tax Act, as
amended from time to time.
"Person" means and includes any individual, trust, estate,
partnership, association, company or corporation.
"Qualified heir" means a qualified heir as defined in
Section 2032A(e)(1) of the Internal Revenue Code.
"Resident trust" means a trust that is a resident of this

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State for purposes of the Illinois Income Tax Act, as amended
from time to time.
"State" means any state, territory or possession of the
United States and the District of Columbia.
"State tax credit" means:
(a) For persons dying on or after January 1, 2003 and
through December 31, 2005, an amount equal to the full credit
calculable under Section 2011 or Section 2604 of the Internal
Revenue Code as the credit would have been computed and
allowed under the Internal Revenue Code as in effect on
December 31, 2001, without the reduction in the State Death
Tax Credit as provided in Section 2011(b)(2) or the
termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
increased applicable exclusion amount through December 31,
2005.
(b) For persons dying after December 31, 2005 and on or
before December 31, 2009, and for persons dying after December
31, 2010, an amount equal to the full credit calculable under
Section 2011 or 2604 of the Internal Revenue Code as the credit
would have been computed and allowed under the Internal
Revenue Code as in effect on December 31, 2001, without the
reduction in the State Death Tax Credit as provided in Section
2011(b)(2) or the termination of the State Death Tax Credit as
provided in Section 2011(f) as enacted by the Economic Growth

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and Tax Relief Reconciliation Act of 2001, but recognizing the
exclusion amount of only (i) $2,000,000 for persons dying
prior to January 1, 2012, (ii) $3,500,000 for persons dying on
or after January 1, 2012 and prior to January 1, 2013, and
(iii) $4,000,000 for persons dying on or after January 1,
2013, and with reduction to the adjusted taxable estate for
any qualified terminable interest property election as defined
in subsection (b-1) of this Section.
(b-1) The person required to file the Illinois return may
elect on a timely filed Illinois return a marital deduction
for qualified terminable interest property under Section
2056(b)(7) of the Internal Revenue Code for purposes of the
Illinois estate tax that is separate and independent of any
qualified terminable interest property election for federal
estate tax purposes. For purposes of the Illinois estate tax,
the inclusion of property in the gross estate of a surviving
spouse is the same as under Section 2044 of the Internal
Revenue Code.
In the case of any trust for which a State or federal
qualified terminable interest property election is made, the
trustee may not retain non-income producing assets for more
than a reasonable amount of time without the consent of the
surviving spouse.
"Taxable transfer" means an event that gives rise to a
state tax credit, including any credit as a result of the
imposition of an additional tax under Section 2032A(c) of the

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Internal Revenue Code.
"Transferee" means a transferee within the meaning of
Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
Code.
"Transferred property" means:
(1) With respect to a taxable transfer occurring at
the death of an individual, the deceased individual's
gross estate as defined in Section 2031 of the Internal
Revenue Code.
(2) With respect to a taxable transfer occurring as a
result of a taxable termination as defined in Section
2612(a) of the Internal Revenue Code, the taxable amount
determined under Section 2622(a) of the Internal Revenue
Code.
(3) With respect to a taxable transfer occurring as a
result of a taxable distribution as defined in Section
2612(b) of the Internal Revenue Code, the taxable amount
determined under Section 2621(a) of the Internal Revenue
Code.
(4) With respect to an event which causes the
imposition of an additional estate tax under Section
2032A(c) of the Internal Revenue Code, the qualified real
property that was disposed of or which ceased to be used
for the qualified use, within the meaning of Section
2032A(c)(1) of the Internal Revenue Code.
"Trust" includes a trust as defined in Section 2652(b)(1)

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of the Internal Revenue Code.
(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
97-636, eff. 6-1-12.)
(35 ILCS 405/3) (from Ch. 120, par. 405A-3)
Sec. 3. Illinois estate tax.
(a) Imposition of Tax. An Illinois estate tax is imposed
on every taxable transfer involving transferred property
having a tax situs within the State of Illinois.
(b) Amount of tax. On estates of persons dying before
January 1, 2003, the amount of the Illinois estate tax shall be
the state tax credit, as defined in Section 2 of this Act, with
respect to the taxable transfer reduced by the lesser of:
(1) the amount of the state tax credit paid to any
other state or states; and
(2) the amount determined by multiplying the maximum
state tax credit allowable with respect to the taxable
transfer by the percentage which the gross value of the
transferred property not having a tax situs in Illinois
bears to the gross value of the total transferred
property.
(c) On estates of persons dying on or after January 1, 2003
and before January 1, 2026, the amount of the Illinois estate
tax shall be the state tax credit, as defined in Section 2 of
this Act, reduced by the amount determined by multiplying the
state tax credit with respect to the taxable transfer by the

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percentage which the gross value of the transferred property
not having a tax situs in Illinois bears to the gross value of
the total transferred property.
(d) For estates of persons dying on or after January 1,
2026, the amount of the Illinois estate tax shall be the amount
of the Illinois taxable estate, multiplied by the Illinois
estate tax rate. No tax shall be due under this Act if the
decedent's Illinois taxable estate is not greater than zero.
(Source: P.A. 93-30, eff. 6-20-03; 94-419, eff. 8-2-05.)
(35 ILCS 405/4) (from Ch. 120, par. 405A-4)
Sec. 4. Illinois generation-skipping transfer tax.
(a) Imposition of tax. An Illinois generation-skipping
transfer tax is imposed on every taxable transfer resulting in
federal generation-skipping transfer tax involving transferred
property having a tax situs within the State of Illinois.
(b) Amount of tax. For taxable transfers occurring before
January 1, 2026, the The amount of the Illinois
generation-skipping transfer tax shall be the maximum state
tax credit allowable with respect to the taxable transfer,
reduced by the lesser of:
(1) the amount of the state tax credit paid to any
other state or states; and
(2) the amount determined by multiplying the maximum
state tax credit allowable with respect to the taxable
transfer by the percentage which the gross value of the

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transferred property not having a tax situs in Illinois
bears to the gross value of the total transferred
property.
(c) For taxable transfers occurring on or after January 1,
2026, the amount by which the taxable transfer exceeds the
exemption amount, multiplied by the Illinois estate tax rate.
(Source: P.A. 86-737.)
Section 99. Effective date. This Act takes effect upon
becoming law.