Illinois Estate Tax and Farmland: Why a $4 Million Threshold Catches More Farm Families Than They Expect
The Threshold Most Farm Families Did Not Think Applied to Them
The Illinois estate tax applies to taxable estates above $4 million per individual, and unlike the federal estate tax, the Illinois exemption is not portable between spouses. Most farm families who have done estate planning in the last few years have focused on the federal exemption — currently $15 million per individual and $30 million for a married couple using portability — and concluded that the federal tax is not a concern. That conclusion is often correct for the federal picture and entirely wrong for the state picture.
A farm worth $5 million at current values produces an Illinois taxable estate for a single landowner, or for the surviving spouse if the property was titled solely in the name of the first spouse to die. The Illinois tax is calculated on the full estate value above the threshold at graduated rates, and the result on a modest overage can be a tax bill in the range of $100,000 to $285,000 or more depending on the total estate size and structure. That is a real number for a family that assumed the estate tax was a concern only for very large operations.
What has changed is land values. A landowner in Menard, Mason, or Cass County who acquired 300 acres at $1,200 per acre in the 1990s and has watched that ground appreciate to $8,000 to $10,000 per acre now holds an asset worth $2.4 million to $3 million on that single parcel. Add a farm residence, equipment, retirement accounts, and other assets, and the same estate that was well below the threshold 20 years ago may now be $4.5 million to $5.5 million. The threshold has not moved; the land has.
How Farmland Appreciation Creates the Problem
Illinois farmland has appreciated significantly over the past 15 to 20 years. ISPFMRA survey data for 2025 showed western Illinois Excellent ground averaging around $15,400 per acre and central Illinois high-productivity ground ranging from $13,000 to $18,500 per acre. An owner who holds 400 acres of average-to-good ground in Sangamon County at $12,000 per acre holds $4.8 million in that asset alone. Before any other property, retirement savings, or liquid assets are counted, this single landowner is above the Illinois estate tax threshold.
The calculation gets more complicated for a married couple. Under federal law, a surviving spouse can elect to use the deceased spouse's unused exemption through portability — effectively shielding up to $30 million from federal tax. Illinois does not allow portability. A married couple where one spouse holds the farm in their own name and dies first leaves the surviving spouse with a $4 million exemption — their own — and a potential estate tax bill on any amount above it. The first spouse's $4 million exemption is gone if it was not used during their lifetime.
This means that for a farm couple with a combined estate of $8 million, structured so that all the farmland is in one spouse's name, the first death produces an estate of $8 million with a single $4 million exemption. The tax on the excess is owed by the estate within nine months of death. If the primary asset is farmland and the estate lacks liquidity, the family may face a choice between selling land and paying the tax or borrowing against land that the heirs expected to inherit debt-free.
Why the Plan Has to Be in Place Before the First Spouse Dies
Illinois estate planning for a farm couple has to account for the fact that the exemptions must both be used — or at least preserved — before either spouse dies, because portability is not available to capture the unused exemption afterward. A bypass trust, sometimes called a credit shelter trust, is the traditional tool for preserving the first-to-die spouse's exemption. The trust is funded at the first death with assets up to the exemption amount, those assets pass outside the surviving spouse's estate, and the surviving spouse retains access to income from the trust. The result is that both exemptions are utilized rather than only one.
Other planning structures — annual gifting programs using the federal annual exclusion, family limited partnerships, conservation easements, or installment sales to heirs — can reduce the taxable estate during the landowner's lifetime and may be appropriate depending on the family situation and the goal for the land. An Illinois estate attorney who handles agricultural estates is the right person to design the specific structure. What I can tell a landowner is that the time to start that conversation is before a health event makes it urgent, not after.
Where a Broker's Valuation Fits
An estate plan that addresses farmland needs to be built around a current, accurate valuation of the land. An attorney or CPA cannot design a gifting program, fund a bypass trust correctly, or evaluate whether a conservation easement reduces the estate enough to matter if they are working from a number that is three or five years old. Farmland that appraised at $7,000 per acre in 2019 may be worth $10,000 to $12,000 per acre today, and that difference changes whether the estate is above or below the threshold.
A broker opinion of value on agricultural or recreational land — the kind of current market analysis that a broker active in the county can provide based on recent comparable sales — is a starting point for the estate planning conversation. It is not an appraisal for tax purposes, which requires a certified appraisal, but it gives an attorney and CPA an accurate picture of where the estate stands before they begin the planning work.
Call Archer Realty if you need a current broker opinion of value on farmland or recreational property in Menard, Sangamon, Mason, Cass, Adams, or neighboring counties as part of an estate planning process.
Jared Williams is the Managing Broker and owner of Archer Realty & Auction LLC. He serves on the Menard County Board of Review and regularly works with farm families, attorneys, and CPAs on land valuation for estate planning purposes. Start the conversation at archerrealty.net.
