Congress Considering Full Repeal of Estate Tax

Takeaways

• Republicans are pushing to repeal the federal estate tax, which they call the “death tax,” arguing it burdens family businesses and farms. Democrats contend it is a key tool for reducing wealth concentration.
• The tax currently applies to a small percentage of estates and generates a relatively modest portion of federal government revenue. However, it remains a point of contention in tax policy debates.
• Recent legislative efforts, such as the Death Tax Repeal Act of 2025, aim to end the estate tax for good.

Republicans are once again pushing to do away with the federal estate tax, which many of them have branded a “death tax.” On paper, it affects few Americans. Nevertheless, it has sparked a long-running debate over wealth taxation in the United States.

The Death Tax Repeal Act of 2025, introduced in the House and Senate this past February, is the latest GOP effort to permanently repeal property transfer taxes at death. The bills also aim to remove the generation-skipping transfer (GST) tax while keeping the lifetime gift tax exemption and the step-up in basis for inherited assets.

Repeal of the estate tax could be included in a massive economic package that Republicans plan to approve in the coming months. Many provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025.

Background on the Estate Tax: A Small But Symbolic Revenue Source

The federal estate tax, applied to property transfers at death since 1916, serves two purposes: revenue and redistribution. Only 0.1% to 0.2% of Americans — roughly 3,000 to 4,000 estates — pay estate taxes each year, according to IRS data.

In 2025, the tax applies to estates over $13.99 million for single filers and $27.98 million for married couples, with a top rate of 40%. Estate tax revenues totaled $24 billion in 2023, or around 0.1% of GDP.

The Center on Budget and Policy Priorities calls the estate tax “the most progressive part of the U.S. Tax Code.” Although it generates less than 1% of federal revenue, the Center says it is still significant.

The Tax Foundation notes the estate tax is a “small, relatively inconsequential piece of the federal tax system.” Eliminating it would lower taxes for the wealthiest Americans, but not by much. Administrative costs and lost investment also affect estates and the economy.

CBPP adds that estate tax compliance costs are modest. Any increase in private savings from repeal would likely be offset by higher government borrowing.

Debates about the death tax have lasted more than a century. Proponents argue it reduces wealth concentration. Opponents claim it unfairly burdens farmers and small businesses.

Early History of the Estate Tax

Early estate taxes focused on revenue rather than ideology. The Stamp Act of 1797 taxed wills and estates to fund naval expansion during tensions with France but was repealed in 1802. The Civil War brought another version in 1862, which phased out by 1870.

The permanent federal estate tax began in 1916. It imposed a 10% top rate on estates over $5 million (about $140 million today). It aimed to curb wealth concentration and address populist concerns. Industrial titans like Carnegie and Rockefeller symbolized inequality, and thinkers such as Henry George and Teddy Roosevelt argued concentrated wealth threatened democracy.

Early critics called the estate tax a “soak-the-rich” scheme. Repeal efforts gained traction after WWII, when economic growth reduced the need for high taxes. The modern repeal movement gained momentum with the 1997 Taxpayer Relief Act, which increased exemptions. The “death tax” label, coined by GOP strategists like Frank Luntz, framed it as double taxation. The 2001 Tax Relief Reconciliation Act further raised exemptions, reduced rates, and scheduled full repeal for 2010 — briefly achieved due to legislative sunsetting.

In 2011, the estate tax returned. Under the Trump-era TCJA, the exemption reached historic highs. After 2025, exemptions revert to pre-TCJA inflation-adjusted levels of around $7 million per person unless Congress acts.

The 2025 Death Tax Repeal Act

Republicans introduced the Death Tax Repeal Act on February 13, 2025. Versions of the Act have appeared annually since 2015, according to law firm Koley Jessen. This year’s versions are part of a $4.5 trillion tax blueprint to extend Trump’s 2017 laws. Eliminating the estate tax could cost an additional $300 billion over a decade, reports Bloomberg.

Estate tax repeal reportedly has support from 46 senators. Ways and Means Chair Jason Smith, most House Republicans, and the National Federation of Independent Business back it as well.

Sen. John Thune (R-SD) sponsors the Senate version. He argues that family farms often lack liquidity to pay high estate taxes. Randy Feenstra (R-Iowa) sponsors the House version with 175 co-sponsors.

• Permanent gift tax exemption of $10 million (adjusted for inflation)
• Gift tax rate reduction from 40% to 35%
• Retention of capital gains “basis adjustment” for inherited assets

Trump supported full repeal in 2017 but increased exemptions instead. Vice President J.D. Vance co-sponsored repeal efforts in 2023. Critics like Robert Reich warn repeal benefits wealthy families disproportionately, echoing arguments from the early 20th century.

Plan Proactively to Stay Ahead of Changes

Families subject to the estate tax should consider planning now. Strategies include locking in current exemptions, GST planning, funding bypass trusts, charitable giving, and family limited partnerships.

These strategies are not only for high-net-worth families. They help shield assets from creditors, protect children’s inheritances, and navigate political or economic changes.

Asset protection strategies, like LLCs and revocable trusts, can complement tax planning using irrevocable trusts. Plans can be updated as legal or economic conditions change.

For guidance tailored to your wealth and legacy goals, consult with a qualified estate planning professional.