ESTATE TAX-MANUFACTURING

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HB4816 - 104th General Assembly

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB4816

Introduced , by Rep. Joe C. Sosnowski

SYNOPSIS AS INTRODUCED:

35 ILCS 405/2

from Ch. 120, par. 405A-2

Amends the Illinois Estate and Generation-Skipping Transfer Tax Act.
Provides that, for persons dying on or after January 1, 2027, the State tax
credit shall be calculated as though the decedent's federal taxable estate
did not include the decedent's business interest in a manufacturing
business located in this State. Defines "manufacturing business".
Effective immediately.
LRB104 17280 HLH 30702 b

A BILL FOR

HB4816
LRB104 17280 HLH 30702 b
1

AN ACT concerning revenue.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The Illinois Estate and Generation-Skipping
5
Transfer Tax Act is amended by changing Section 2 as follows:

6

(35 ILCS 405/2)

(from Ch. 120, par. 405A-2)
7

Sec. 2.
Definitions.
In this Act:

8

"Federal estate tax" means the tax due to the United
9
States with respect to a taxable transfer under Chapter 11 of
10
the Internal Revenue Code.
11

"Federal generation-skipping transfer tax" means the tax
12
due to the United States with respect to a taxable transfer
13
under Chapter 13 of the Internal Revenue Code.
14

"Federal return" means the federal estate tax return with
15
respect to the federal estate tax and means the federal
16
generation-skipping transfer tax return with respect to the
17
federal generation-skipping transfer tax.
18

"Federal transfer tax" means the federal estate tax or the
19
federal generation-skipping transfer tax.
20

"Illinois estate tax" means the tax due to this State with
21
respect to a taxable transfer.
22

"Illinois generation-skipping transfer tax" means the tax
23
due to this State with respect to a taxable transfer that gives

HB4816
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LRB104 17280 HLH 30702 b
1
rise to a federal generation-skipping transfer tax.
2

"Illinois transfer tax" means the Illinois estate tax or
3
the Illinois generation-skipping transfer tax.
4

"Internal Revenue Code" means, unless otherwise provided,
5
the Internal Revenue Code of 1986, as amended from time to
6
time.
7

"Manufacturing business" means a business within the
8
manufacturing sector, as defined in North American Industry
9
Classification System (NAICS) codes 31 through 33.

10

"Non-resident trust" means a trust that is not a resident
11
of this State for purposes of the Illinois Income Tax Act, as
12
amended from time to time.
13

"Person" means and includes any individual, trust, estate,
14
partnership, association, company or corporation.
15

"Qualified heir" means a qualified heir as defined in
16
Section 2032A(e)(1) of the Internal Revenue Code.
17

"Resident trust" means a trust that is a resident of this
18
State for purposes of the Illinois Income Tax Act, as amended
19
from time to time.
20

"State" means any state, territory or possession of the
21
United States and the District of Columbia.
22

"State tax credit" means:
23

(a) For persons dying on or after January 1, 2003 and
24
through December 31, 2005, an amount equal to the full credit
25
calculable under Section 2011 or Section 2604 of the Internal
26
Revenue Code as the credit would have been computed and

HB4816
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LRB104 17280 HLH 30702 b
1
allowed under the Internal Revenue Code as in effect on
2
December 31, 2001, without the reduction in the State Death
3
Tax Credit as provided in Section 2011(b)(2) or the
4
termination of the State Death Tax Credit as provided in
5
Section 2011(f) as enacted by the Economic Growth and Tax
6
Relief Reconciliation Act of 2001, but recognizing the
7
increased applicable exclusion amount through December 31,
8
2005.
9

(b) For persons dying after December 31, 2005 and on or
10
before December 31, 2009, and for persons dying after December
11
31, 2010, an amount equal to the full credit calculable under
12
Section 2011 or 2604 of the Internal Revenue Code as the credit
13
would have been computed and allowed under the Internal
14
Revenue Code as in effect on December 31, 2001, without the
15
reduction in the State Death Tax Credit as provided in Section
16
2011(b)(2) or the termination of the State Death Tax Credit as
17
provided in Section 2011(f) as enacted by the Economic Growth
18
and Tax Relief Reconciliation Act of 2001, but
with the
19
following modifications:
20

(1) the exclusion amount shall be:

recognizing the
21

exclusion amount of only (i)

22

(A)
$2,000,000 for persons dying prior to January
23

1, 2012
;

,
24

(B)

(ii)
$3,500,000 for persons dying on or after
25

January 1, 2012 and prior to January 1, 2013
; and

, and

26

(C)

(iii)
$4,000,000 for persons dying on or after

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LRB104 17280 HLH 30702 b
1

January 1, 2013
;

,
2

(2) for persons dying on or after January 1, 2027, the
3

State tax credit shall be calculated as though the
4

decedent's federal taxable estate did not include the
5

decedent's business interest in a manufacturing business
6

located in this State; and

7

(3) the State tax credit shall be calculated

and
with
8

a
reduction to the adjusted taxable estate for any
9

qualified terminable interest property election as defined
10

in subsection (b-1) of this Section.
11

(b-1) The person required to file the Illinois return may
12
elect on a timely filed Illinois return a marital deduction
13
for qualified terminable interest property under Section
14
2056(b)(7) of the Internal Revenue Code for purposes of the
15
Illinois estate tax that is separate and independent of any
16
qualified terminable interest property election for federal
17
estate tax purposes. For purposes of the Illinois estate tax,
18
the inclusion of property in the gross estate of a surviving
19
spouse is the same as under Section 2044 of the Internal
20
Revenue Code.
21

In the case of any trust for which a State or federal
22
qualified terminable interest property election is made, the
23
trustee may not retain non-income producing assets for more
24
than a reasonable amount of time without the consent of the
25
surviving spouse.
26

"Taxable transfer" means an event that gives rise to a

HB4816
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LRB104 17280 HLH 30702 b
1
state tax credit, including any credit as a result of the
2
imposition of an additional tax under Section 2032A(c) of the
3
Internal Revenue Code.
4

"Transferee" means a transferee within the meaning of
5
Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
6
Code.
7

"Transferred property" means:

8

(1) With respect to a taxable transfer occurring at
9

the death of an individual, the deceased individual's
10

gross estate as defined in Section 2031 of the Internal
11

Revenue Code.

12

(2) With respect to a taxable transfer occurring as a
13

result of a taxable termination as defined in Section
14

2612(a) of the Internal Revenue Code, the taxable amount
15

determined under Section 2622(a) of the Internal Revenue
16

Code.

17

(3) With respect to a taxable transfer occurring as a
18

result of a taxable distribution as defined in Section
19

2612(b) of the Internal Revenue Code, the taxable amount
20

determined under Section 2621(a) of the Internal Revenue
21

Code.

22

(4) With respect to an event which causes the
23

imposition of an additional estate tax under Section
24

2032A(c) of the Internal Revenue Code, the qualified real
25

property that was disposed of or which ceased to be used
26

for the qualified use, within the meaning of Section

HB4816
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LRB104 17280 HLH 30702 b
1

2032A(c)(1) of the Internal Revenue Code.
2

"Trust" includes a trust as defined in Section 2652(b)(1)
3
of the Internal Revenue Code.
4
(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
5
97-636, eff. 6-1-12; revised 7-24-25.)

6

Section 99.
Effective date.
This Act takes effect upon
7
becoming law.

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