FARMER TAX BENEFIT ACT

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB4193

Introduced 4/28/2026, by Sen. Robert F. Martwick

SYNOPSIS AS INTRODUCED:

New Act
35 ILCS 5/253 new

Creates the Farmer Tax Benefit Act. Provides that, for taxable years
ending on or after December 31, 2027, landowners may apply to the
Department for an income tax credit in an amount equal to either (i) 100%
of the fair market value of a qualified donation of a land protection
agreement or (ii) 50% of the fair market value of the qualified donation of
a fee simple interest or a remainder interest in qualified real property.
Specifies that the total aggregate amount of tax credits issued under the
Act in any State fiscal year shall not exceed $7,500,000. Further provides
that the amount of the credit that may be claimed by a landowner for any
single qualified donation shall not exceed $500,000. Contains additional
provisions concerning allocation of the credit by the Department of
Natural Resources and other powers of the Department of Natural Resources,
allowable credit use, the Illinois Land Protection Tax Credit, legislative
findings, and other related matters. Amends the Illinois Income Tax Act.
Makes conforming changes. Effective immediately.
LRB104 21567 HLH 36981 b

A BILL FOR

SB4193
LRB104 21567 HLH 36981 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 1.
Short title.
This Act may be cited as the
Farmer
5
Tax Benefit Act.

6

Section 5.
Purpose and findings.
The General Assembly
7
finds that:
8

(1) The State of Illinois' unique natural resources,
9

wildlife habitats, open spaces, agricultural and forested
10

resources, wetlands, and historical, cultural, and
11

archaeological resources are of significant economic,
12

environmental, and social benefit to the State and the
13

public.
14

(2) The Illinois economy is vulnerable to other states
15

that have financial incentive programs targeted to support
16

the protection of unique natural and agricultural
17

resources. Illinois should advance new tools to ensure
18

that Illinois offers a competitive quality of life and is
19

desirable in site location decision-making for businesses.
20

(3) Natural carbon storage and increasing carbon
21

sequestration from natural and working lands is a critical
22

component of State and national deep decarbonization
23

strategies because the maintenance of existing sequestered

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1

carbon in intact natural and working lands systems can be
2

among the most cost-effective ways to support climate
3

goals.
4

(4) The protection of natural and working lands is an
5

important climate adaptation strategy, with land
6

conservation serving to build community resilience against
7

extreme weather events, such as by absorbing excess
8

rainwater to reduce flooding, filtering pollutants,
9

offering cooling from extreme heat, preserving
10

biodiversity, ensuring species' corridor migration, and
11

protecting productive farmland that provides food
12

security.
13

(5) Many of the State's unique natural, historical,
14

agricultural, and open space resources and habitats are
15

found on lands that are privately owned. The General
16

Assembly intends to provide private landowners with
17

incentives to encourage voluntary protection of private
18

lands for open space, natural resources, biodiversity
19

conservation, water supply, outdoor recreation, farmland
20

and forestland preservation, historic preservation, and
21

land conservation purposes.

22

Section 10.
Definitions.
As used in this Act:
23

"Conservation agency" means the following:
24

(1) the State of Illinois;
25

(2) a federal agency;

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(3) a unit of local government;
2

(4) a federally recognized Indian tribe; or
3

(5) a 501(c)(3) nonprofit organization that has
4

experience acquiring conservation real estate, whether
5

through purchase, donation, or transfer, and that meets
6

the requirements of Section 170(h)(3) of the Internal
7

Revenue Code and the regulations adopted under that
8

Section.
9

A conservation agency must also:
10

(1) be authorized to acquire, hold, and maintain title
11

to real estate or interests in real estate in Illinois;
12

(2) be organized and operated for purposes expressly
13

including natural resource protection, land conservation,
14

or historic preservation; and
15

(3) meet other criteria or certifications required by
16

the Department by rule.
17

Any non-profit corporation that is accredited through the
18
Land Trust Accreditation Commission shall automatically be
19
deemed a conservation agency with no further burden of proof.
20

"Credit" means the Illinois Land Protection Credit created
21
and administered as outlined in this Act.
22

"Department" means the Department of Natural Resources.
23

"Federally recognized Indian tribe" means any Indian tribe
24
that is included on the list of federally recognized Indian
25
tribes that is published from time to time by the United States
26
Department of the Interior under the Federally Recognized

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Indian Tribe List Act of 1994.
2

"Landowner" means the owner of fee simple title to land,
3
as evidenced by the county real property records in the county
4
where the real property interest is located, including,
5
without limitation, individuals, trusts and estates, and
6
entities such as limited liability companies, partnerships,
7
and corporations, whether for profit or not-for-profit.
8

"Land protection agreement" means a restriction on the use
9
that may be made of real property that is granted in perpetuity
10
and created pursuant to Illinois real property law and that
11
complies with Section 170(h)(2)(C) of the Internal Revenue
12
Code.
13

"Qualified appraisal" has the same meaning as that term is
14
defined in 26 CFR 1.170A-17.
15

"Qualified appraiser" has the same meaning as that term is
16
defined in 26 CFR 1.170A-17.
17

"Qualified donation" means the transfer and conveyance by
18
gift, without consideration, of all or a portion, including
19
bargain sales, of a qualified real property interest to a
20
conservation agency if those purposes are secured in
21
perpetuity through recording of a deed in the real property
22
records in the county where the qualified real property
23
interest is located.
24

"Qualified real property interest" means any of the
25
following interests in real property located in the State of
26
Illinois:

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(1) a fee simple interest;
2

(2) a remainder interest; or
3

(3) a land protection agreement.
4

A fee simple interest or remainder interest shall not be
5
deemed a qualified real property interest unless the
6
conservation and preservation purposes are assured in
7
perpetuity. In these cases, the credit shall not be allowed
8
until the conservation agency agrees in recorded documentation
9
that any subsequent conveyances of the fee simple or remainder
10
interest in the property will be subject to a prior conveyance
11
in perpetuity of a land protection agreement or will be
12
conveyed to another conservation agency.

13

Section 15.
Credit availability.
14

(a) For taxable years ending on or after December 31,
15
2027, landowners may apply to the Department for a credit
16
against the tax imposed by subsections (a) and (b) of Section
17
201 of the Illinois Income Tax Act in an amount equal to either
18
(i) 100% of the fair market value of a qualified donation of a
19
land protection agreement or (ii) 50% of the fair market value
20
of the qualified donation of a fee simple interest or a
21
remainder interest in qualified real property. The fair market
22
value of any donation made under this Section shall be
23
substantiated by a qualified appraisal prepared by a qualified
24
appraiser.
25

(b) The total aggregate amount of tax credits issued under

SB4193
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1
this Act in any State fiscal year shall not exceed $7,500,000.
2
Tax credits shall be allocated on a first-come, first-served
3
basis. The Department shall log applications as they are
4
received. If the $7,500,000 total aggregate cap is exceeded in
5
any one year, the Department shall issue a certificate of tax
6
credit to be available to the landowner in the subsequent tax
7
year with an effective date of the subsequent year.
8

(c) The amount of the credit that may be claimed by a
9
landowner for any single qualified donation shall not exceed
10
$500,000.
11

(d) The credit under this Act is exempt from the
12
provisions of Section 250 of the Illinois Income Tax Act.

13

Section 20.
Credit allocation by the Department.
14

(a) A landowner seeking to claim a tax credit under
15
Section 15 shall, in either the year of the donation or the
16
year following the year of donation, submit to the Department
17
an application for a land protection tax credit on a form to be
18
created by the Department. The application shall be
19
accompanied by the qualified appraisal substantiating the
20
value of the qualified donation and the deed transferring the
21
qualified real property interest. If the landowner is a
22
pass-through entity, the application shall also include
23
documentation that the landowner has owned the property for
24
more than 3 years at the time of the donation or otherwise
25
meets the family exception set forth in Section 40.

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(b) On receipt of the application and all supporting
2
documentation, the Department shall either (i) record the
3
transaction and provide the landowner with a certificate
4
acknowledging the credit, together with a tracking number, on
5
a form to be created by the Department, (ii) request more
6
information, or (iii) decline to issue the certificate by
7
providing a written statement of the deficiencies in the
8
application. The landowner shall have an opportunity to cure
9
any deficiencies. Upon satisfactory review of the application,
10
the Department shall issue the certificate stating the amount
11
of the tax credit.
12

If the landowner is receiving compensation for any
13
non-donated portion of a qualified real property interest and
14
that compensation derives from a federal, State, or local
15
public conservation funding source, then the landowner shall
16
include, with the application, documentation confirming the
17
award of public funding towards the qualified real property
18
interest. In that case, the public funding award shall be
19
determinative of the conservation benefit and value, no
20
additional review by the Department shall be necessary, and
21
the credit shall be automatically granted and the certificate
22
automatically issued.
23

(c) No single landowner may apply for more than one credit
24
per year.

25

Section 25.
Allowable credit use.

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(a) The credit shall be taken in the taxable year in which
2
the tax certificate is issued. In no event shall a credit under
3
this Section reduce the taxpayer's liability to less than
4
zero. If the amount of the credit exceeds the income tax
5
liability for the applicable tax year, the excess may be
6
carried forward and applied to the tax liability of the 5
7
taxable years following the excess credit year. The credit
8
shall be applied to the earliest year for which there is a tax
9
liability. If there are credits from more than one year that
10
are available to offset a liability, the earlier credit shall
11
be applied first.
12

(b) The landowner, at its option, may elect to transfer,
13
rather than claim, the tax credit. A sale, assignment, or
14
transfer of the tax credit may be made by the landowner earning
15
the credit within one year after the certificate of tax credit
16
is issued by the Department. Upon notice of a transfer, the
17
Department shall issue transfer certificates to the transferor
18
and transferee that identify the amount of the credit
19
transferred. Upon issuance of the transfer certificates, the
20
transferor relinquishes all rights to the portion of the
21
credit that was transferred. The transferred credit may be
22
applied by the transferee against its tax imposed by the
23
Illinois Income Tax Act, and any credit not used by the
24
transferee may be carried forward for a 5-year carry forward
25
period. A landowner seeking to transfer a credit shall submit
26
to the Department a Notice of Tax Credit Transfer on a form to

SB4193
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LRB104 21567 HLH 36981 b
1
be created by the Department. Upon any transfer of a credit, a
2
fee equal to 3% of the amount of the credit so transferred
3
shall be paid to the Department by the landowner to cover the
4
administrative costs of this process.

5

Section 30.
Powers of the Department.
6

(a) The Department, in addition to those powers granted
7
under the Civil Administrative Code of Illinois, is granted
8
and has all the powers necessary or convenient to carry out and
9
effectuate the purposes and provisions of this Act, including,
10
but not limited to, power and authority to:
11

(1) Adopt rules deemed necessary and appropriate for
12

the administration of the tax credit program.
13

(2) Establish forms for applications, notifications,
14

contracts, or any other agreements and accept applications
15

at any time during the year.
16

(3) Assist applicants pursuant to the provisions of
17

this Act to promote, foster, and support land conservation
18

and its related benefits within the State.
19

(4) Gather information and conduct inquiries in the
20

manner and by the methods as it deems desirable.
21

(5) Provide for sufficient personnel to permit
22

administration, staffing, operation, and related support
23

required to adequately discharge its duties and
24

responsibilities described in this Act from funds as may
25

be appropriated by the General Assembly for the

SB4193
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LRB104 21567 HLH 36981 b
1

administration of this Act.
2

(6) Require applicants, upon written request, to issue
3

any necessary authorization to the appropriate federal,
4

State, or local authority for the release of information
5

concerning a project being considered under the provisions
6

of this Act, with the information requested to include,
7

but not be limited to, financial reports, returns, or
8

records.
9

(b) The Department shall adopt rules within 12 months
10
after the effective date of this Act.

11

Section 35.
Analysis of the Illinois Land Protection Tax
12
Credit.
13

(a) By December 31, 2032, the Department, in consultation
14
with other State agencies as needed, shall prepare a report
15
detailing the amount of land and the fair market value of land
16
protected during the reporting period pursuant to this Act.
17
The Department may consider application and attestation
18
information provided by eligible landowners pursuant to this
19
Act and any other data it deems relevant.
20

(b) The final report shall be made publicly available, and
21
copies of the final report shall be filed with the General
22
Assembly and the Governor.

23

Section 40.
Applicability and limitations.
24

(a) For taxable years ending on or after December 31,

SB4193
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LRB104 21567 HLH 36981 b
1
2027, for partners and shareholders of Subchapter S
2
corporations, the provisions of Section 251 shall apply with
3
respect to the credit under this subsection.
4

(b) In the case of a pass-through entity described in
5
subsection (a), no qualified donation shall be eligible for a
6
tax credit under this Act unless the entity acquired the land
7
or qualified real property interest 3 or more years before the
8
donation for which the qualified donation is being sought.
9

(c) Subsection (b) shall not apply with respect to any
10
qualified donation by any partnership or pass-through entity
11
for which a tax credit is being sought under this Act if
12
substantially all of the partnership interests or pass-through
13
entity interests in the partnership or pass-through entity are
14
held, directly or indirectly, by an individual or members of
15
the individual's family.
16

As used in this subsection, "member of the family" means
17
the individual's spouse or any person who bears a relationship
18
to the individual that is described in Internal Revenue Code
19
Section 152(d)(2) subparagraphs (A) through (G).
20

(d) If a conservation agency becomes unqualified after the
21
effective date of a qualified donation, it shall not require
22
any taxpayer to repay tax credits claimed under this Act, nor
23
shall such event be cause for any other penalty to be imposed
24
on a taxpayer.

25

Section 45.
Construction.

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1

(a) Nothing in this Act shall be interpreted to in any way
2
alter or amend any permit requirements, reporting
3
requirements, allocation procedures, or other requirements set
4
forth in any other provision of State law.
5

(b) Notwithstanding any provision of law to the contrary,
6
a land protection agreement held pursuant to this Section
7
shall be construed in favor of achieving the conservation
8
purposes for which it was created.

9

Section 900.
The Illinois Income Tax Act is amended by
10
adding Section 253 as follows:

11

(35 ILCS 5/253 new)
12

Sec. 253.
Land Protection Tax Credit.
13

(a) A landowner who has been awarded a credit under the
14
Farmer Tax Benefit Act is entitled to a credit as provided in
15
that Act and in this Section.

16

(b) For taxable years ending on or after December 31,
17
2027, landowners may apply to the Department of Natural
18
Resources for a credit against the tax imposed by subsections
19
(a) and (b) of Section 201 in an amount equal to either (i)
20
100% of the fair market value of a qualified donation of a land
21
protection agreement or (ii) 50% of the fair market value of
22
the qualified donation of a fee simple interest or a remainder
23
interest in qualified real property. The fair market value of
24
any donation made under this Section shall be substantiated by

SB4193
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LRB104 21567 HLH 36981 b
1
a qualified appraisal prepared by a qualified appraiser.

2

(c) The total aggregate amount of tax credits issued under
3
this Act in any State fiscal year shall not exceed $7,500,000.

4

(d) The credit shall be taken in the taxable year in which
5
the tax certificate is issued. In no event shall a credit under
6
this Section reduce the taxpayer's liability to less than
7
zero. If the amount of the credit exceeds the income tax
8
liability for the applicable tax year, the excess may be
9
carried forward and applied to the tax liability of the 5
10
taxable years following the excess credit year. The credit
11
shall be applied to the earliest year for which there is a tax
12
liability. If there are credits from more than one year that
13
are available to offset a liability, the earlier credit shall
14
be applied first.

15

(e) The landowner, at its option, may decide to transfer,
16
rather than claim, the tax credit. A sale, assignment, or
17
transfer of the tax credit may be made by the landowner earning
18
the credit within one year after the certificate of tax credit
19
is issued by the Department of Natural Resources. Upon notice
20
of transfer, the Department of Natural Resources shall issue
21
transfer certificates to the transferor and transferee that
22
identify the amount of the credit transferred. Upon issuance
23
of the transfer certificates, the transferor relinquishes all
24
rights to the portion of the credit that was transferred. The
25
transferred credit may be applied by the transferee against
26
its tax imposed by this Act, and any credit not used by the

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1
transferee may be carried forward for a 5-year carry forward
2
period.

3

(f) The amount of the credit that may be claimed by a
4
landowner for any single qualified donation shall not exceed
5
$500,000.

6

(g) For taxable years ending on or after December 31,
7
2027, for partners and shareholders of Subchapter S
8
corporations, the provisions of Section 251 shall apply with
9
respect to the credit under this Section.

10

(h) In the case of a pass-through entity described in
11
subsection (g), no qualified donation shall be eligible for a
12
tax credit under this Act unless the entity acquired the land
13
or qualified real property interest 3 or more years before the
14
donation for which the qualified donation is being sought.

15

(i) Subsection (h) shall not apply with respect to any
16
qualified donation by any partnership or pass-through entity
17
for which a tax credit is being sought under this Act if
18
substantially all of the partnership interests or pass-through
19
entity interests in the partnership or pass-through entity are
20
held, directly or indirectly, by an individual or members of
21
the individual's family.

22

As used in this subsection, "member of the family" means
23
the individual's spouse or any person who bears a relationship
24
to the individual that is described in subparagraphs (A)
25
through (G) of Internal Revenue Code Section 152(d)(2).

26

(j) If a conservation agency becomes unqualified after the

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1
effective date of a qualified donation, it shall not require
2
any taxpayer to repay tax credits claimed under this Act, nor
3
shall such event be cause for any other penalty to be imposed
4
on a taxpayer.

5

(k) The credit under this Section is exempt from the
6
provisions of Section 250.

7

Section 999.
Effective date.
This Act takes effect upon
8
becoming law.

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