HB2677 and SB1688 Would Create a $6 Million Estate Tax Exemption, Indexed for Inflation, for Qualifying Illinois Farm Estates
CHICAGO, IL, May 08, 2026 /24-7PressRelease/ — Kravets Law Group, an Illinois business, real estate, and estate law firm, is monitoring the Family Farm Preservation Act—a pair of bipartisan bills pending in the Illinois legislature that would create a dedicated estate tax exemption for qualifying family farms. The firm is prepared to advise families on how the proposed changes, if enacted, could shape succession planning and generational transfers of farmland.
Introduced as House Bill 2677 and Senate Bill 1688, the Family Farm Preservation Act would establish a $6 million estate tax exemption—indexed for inflation—for qualifying farm estates under Internal Revenue Code §2032A, which allows certain farm and closely held business real estate to be valued based on its actual use rather than its highest-and-best-use market value. The proposal has drawn bipartisan support in both chambers and is backed by the Illinois Farm Bureau, which has identified farm estate tax reform as a legislative priority.
“Family farms are one of the most distinctive estate planning challenges we see in Illinois,” said founding attorney Daniel Kravets. “These are operations where the land and equipment may be worth millions on paper, but the cash needed to actually pay an estate tax bill simply isn’t there. That’s the reality behind why this legislation has gained traction, and it’s why we’re following it closely on behalf of the farmers we serve.”
Under current Illinois law, estates valued above $4 million are subject to the state’s estate tax, and Illinois remains one of only twelve states (plus the District of Columbia) to impose an estate tax separate from the federal estate tax. Unlike the federal system, Illinois does not permit portability of the exemption between spouses, and the tax operates as a cliff, meaning that once an estate exceeds the $4 million threshold, the tax applies to the entire estate value rather than only the portion above the exemption.
For Illinois farm families, reaching the $4 million threshold has become increasingly common as land values, equipment costs, and input prices have risen. A single combine can cost more than $1 million before any land, buildings, grain storage, or other equipment is accounted for, which means that even modestly sized operations can generate significant state estate tax exposure when transferred between generations.
The Family Farm Preservation Act Illinois measure would address that dynamic by creating a separate, higher exemption specifically for qualifying farm estates. By tying eligibility to the §2032A special use valuation framework, the legislation would limit the benefit to genuine working farms rather than land held primarily for investment or development, while the inflation adjustment would help preserve the exemption’s value over time.
“The goal for any farm family should be a plan that works under the law as it stands today and remains flexible enough to take advantage of reform if and when it passes,” Kravets added. “Waiting on legislation is rarely a sound strategy. Building a plan that accounts for both possibilities almost always is.”
About the Firm:
Kravets Law Group is a Chicago-based law firm that serves clients across Illinois, Pennsylvania, and New Jersey in the areas of real estate and property law, estate planning, and business and corporate law. The firm was founded by attorney Daniel Kravets, who was raised outside Philadelphia by a Russian immigrant family and built his practice around the belief that legal representation should feel like a partnership, not a transaction. Kravets Law Group offers free consultations for families and individuals who want to review their estate plans in light of current farm estate tax Illinois rules and the proposed changes under the Family Farm Preservation Act.
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