Illinois has no wealth tax on unrealized gains right now, and no billionaire owes anything under one. A proposal in Springfield, Senate Bill 3376, would change that by charging a 4.95% annual tax on the paper appreciation of assets held by residents worth $1 billion or more. The bill sits in the Senate Assignments Committee, has not had a hearing, and faces a serious constitutional question under Illinois’s flat-tax rule. Nothing is due unless and until it passes and survives a court challenge.
Who the Proposal Would Reach
The threshold is a net worth of $1 billion, measured globally. Holding assets outside Illinois wouldn’t shrink the number, because the calculation is based on worldwide assets minus liabilities.1LegiScan. Bill Text: Illinois SB3376 104th General Assembly That ceiling clears almost everyone. Illinois is home to roughly two dozen billionaires in a given year, and the tax would apply to that group alone.
Residency decides who counts as an Illinois taxpayer under the bill. A person qualifies if they are domiciled in the state or spend more than 183 days there during the tax year. The dual test is meant to catch people who claim residency elsewhere while actually living and working in Illinois. Below the billion-dollar line, or outside the residency rules, none of the rest of the proposal applies to you.
What “Mark-to-Market” Means Here
The label “wealth tax” is a bit loose. A true wealth tax charges a percentage of everything you own every year. SB 3376 instead taxes the annual change in value of a billionaire’s assets, whether or not they’ve been sold.2Illinois Senate Democratic Caucus. Senate Progressive Caucus: Revenue Hearing Underscores Need to Reform Illinois’ Regressive Tax Code Under current law, you only owe state income tax on an investment when you sell it. A billionaire can hold appreciating stock for decades, borrow against it to fund spending, and defer taxes almost indefinitely. The mark-to-market structure forces an annual reckoning instead.
The taxable base is broad. Publicly traded stocks and bonds are easiest to value because prices are published daily. The bill would also pull in partnership interests in private equity and hedge funds, shares of privately held companies, bank accounts, certificates of deposit, and mutual fund interests.2Illinois Senate Democratic Caucus. Senate Progressive Caucus: Revenue Hearing Underscores Need to Reform Illinois’ Regressive Tax Code Assets wrapped in trusts, LLCs, and similar structures would still count where the individual keeps effective control. That look-through rule matters because real wealth almost never sits in a single personal brokerage account.
Every covered asset would be valued at fair market price as of December 31 each year. For public securities, that’s a published number. For private businesses and specialized holdings, the taxpayer would need a certified appraisal from a qualified valuation professional, and would need one every year.
How the 4.95% Would Be Calculated
The rate matches Illinois’s flat individual income tax rate of 4.95%.3Illinois Department of Revenue. What’s New for 2025? It applies to the year’s gain, not to total net worth. A billionaire whose portfolio ended the year flat would owe nothing. One whose holdings fell could potentially carry a loss forward.
The bill includes a credit for Illinois income taxes already paid on the same gains. If a billionaire sells stock during the year and pays the standard state income tax on the realized profit, that payment offsets the mark-to-market liability on the same appreciation. The point is to avoid taxing the same dollar twice within the state system.
A rough example: someone with $5 billion in net worth whose holdings appreciate by $400 million in a year would owe 4.95% of $400 million, or about $19.8 million. Supporters have estimated statewide revenue of around $840 million a year, though that depends on market performance and on how many billionaires remain in Illinois.
Where the Bill Actually Stands
State Senator Karina Villa introduced SB 3376, formally titled the Extremely High Wealth Mark-to-Market Tax Act, during the 104th General Assembly. It was referred to the Senate Assignments Committee.4LegiScan. Illinois SB3376 2025-2026 104th General Assembly As of mid-2025 it has not advanced to a subject-matter committee hearing or a floor vote. Bills parked in Assignments tend to stay there unless leadership pushes them forward, so the proposal’s fate turns on political will in Springfield rather than a scheduled timeline.
The Constitutional Problem
The Illinois Constitution requires that any tax “on or measured by income shall be at a non-graduated rate.”5Illinois General Assembly. Constitution of the State of Illinois – Article IX A tax that reaches only people worth $1 billion or more looks, to opponents, like a graduated rate dressed up differently: one rate for billionaires, zero for everyone else. Supporters argue the mark-to-market levy is a separate tax on unrealized gains rather than a modification of the income tax, so the flat-rate rule doesn’t apply. That theory has not been tested in court, and constitutional scholars disagree about how it would come out.
The political backdrop sharpens the question. In 2020, Illinois voters rejected a constitutional amendment that would have allowed graduated income tax rates, with about 53% voting no. Opponents cite that result as a sign the electorate does not want tax structures that single out higher earners.
Article IX also requires that non-property tax classifications be “reasonable” and that subjects within each class be “taxed uniformly.”5Illinois General Assembly. Constitution of the State of Illinois – Article IX A tax that reaches fewer than 30 people in the state would almost certainly draw a legal challenge on those grounds, with a genuinely uncertain outcome.
Open Questions If It Passed
The most familiar criticism of state-level wealth taxes is that wealthy residents leave. Illinois already loses high-income residents to lower-tax states, and a mark-to-market tax aimed at billionaires would add to that pressure. The 183-day residency test can be managed by someone willing to reduce their time in Illinois and set up a primary home elsewhere. The bill does not appear to include an exit tax or clawback that would reach someone who moved before the law took effect.
The estate tax overlap is unsettled. Illinois imposes its own estate tax with a $4 million exemption, far below the federal threshold.6Illinois Attorney General. Important Notice Regarding Illinois Estate Tax and Fact Sheet For a billionaire, the estate bill at death would be substantial regardless. SB 3376 does not say whether mark-to-market taxes paid during life would offset the eventual estate tax on the same appreciation, which opens the door to the same gain being taxed twice.
Compliance would be heavy. Affected taxpayers would file detailed asset and liability disclosures, year-end statements for every domestic and international holding, and a list of every entity in which they hold an ownership stake with the percentage of control. Private holdings would require certified annual appraisals using recognized valuation methods. For a typical billionaire whose assets span dozens of entities across multiple countries, that work would be significant even with a full accounting team behind it.
Until SB 3376 moves out of committee, none of this is operative. If you’re trying to plan around the possibility, the two numbers to watch are the $1 billion threshold and the 183-day residency line; everything else depends on whether the bill advances and how courts treat it if it does.