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” in their efforts to overturn something that, on paper, is relevant to few Americans. Nevertheless, it has been at the center of a long-running debate over wealth taxation in the United States.
The Death Tax Repeal Act of 2025, introduced in the House of Representatives and the Senate this past February, is the latest GOP-led effort to permanently repeal the taxation of property transfers at death. Both bills also seek to get rid of the generation-skipping transfer (GST) tax and retain the permanent lifetime gift tax exemption and the step-up in basis for inherited assets.
Repeal of the estate tax could find its way into a massive economic package that Republicans are aiming to approve in the coming months as many provisions from 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 the transfer of property at death since 1916, has always had dual aims: revenue and redistribution.
Only 0.1 percent to 0.2 percent of Americans — roughly 3,000 to 4,000 estates — pay estate taxes each year, IRS data shows.
In 2025, the tax applies to estates over $13.99 million for single filers and $27.98 million for married couples, levied at a top rate of 40 percent. Revenues from the estate tax totaled $24 billion in 2023, or around 0.1 percent of gross domestic product.
The Center on Budget and Policy Priorities (CBPP) calls the estate tax “the most progressive part of the U.S. Tax Code.” Though it generates less than 1 percent of federal revenue, it is still “significant,” the Center says.
The Tax Foundation writes that the estate tax is a “small, relatively inconsequential piece of the federal tax system.” Getting rid of it, it adds, would “lower taxes on the wealthiest Americans — but not by much.” Despite only a small number of estates actually paying the tax, many estates face administrative costs associated with paying it, and the economy experiences lost investment and growth due to the tax, the Tax Foundation also argues.
CBPP notes that estate tax compliance costs are in fact modest, and that any gain in private savings and investment that repealing the tax might bring would be offset in the economy by the need for more government borrowing.
These talking points echo a debate about the death tax that goes back more than a century. Proponents contend it helps lessen the concentration of wealth in the U.S. by taxing large inheritances, while opponents claim it unfairly burdens American farmers and small-business owners.
Early versions of the estate tax emerged in the 20th century. They were less about ideology and more about pragmatic revenue generation.
The Stamp Act of 1797, for example, imposed a tax on wills and estates to fund naval buildup during tensions with France, but it was repealed in 1802. The Civil War brought another iteration in 1862, taxing inheritances to support the Union effort, only to be phased out by 1870.
The federal government then enacted a permanent federal estate tax in 1916. It imposed a top rate of 10 percent on estates over $5 million (about $140 million in today’s dollars) amid concerns about wealth concentration.
Industrial titans like Carnegie and Rockefeller epitomized the Gilded Age’s inequality, and the tax was partly a response to populist calls to curb dynastic wealth. Thinkers like Henry George and Teddy Roosevelt argued that concentrated land and wealth undermined democracy.
Early critics characterized the estate tax as a “soak-the-rich” scheme. However, repeal efforts gained little traction until after World War II, when the postwar economic boom reduced the urgency for high taxes.
The modern repeal movement kicked into gear with the 1997 Taxpayer Relief Act, which began raising the exemption. The “death tax” label — coined by GOP strategists like Frank Luntz — stuck, framing it as unfair double taxation (since income is taxed before death). The 2001 Tax Relief Reconciliation Act further lifted the exemption, dropped the rate, and slated a full repeal for 2010 — something that was achieved briefly through a fluke of legislative sunsetting and political inaction.
In 2011, the estate tax returned, and, under the Trump-era TCJA, the exemption increased to historically high levels. However, the estate tax exemption is now set to revert to inflation-adjusted pre-TCJA levels of around $7 million per person after 2025 — that is, unless Republicans in Congress get their way.
The 2025 Death Tax Repeal Act
Republican lawmakers in the House and Senate introduced the Death Tax Repeal Act on February 13, 2025.
According to law firm Koley Jessen, versions of the Act have been introduced every year since 2015. This year’s versions are reportedly being pitched as part of a $4.5 trillion tax blueprint to extend Trump’s 2017 tax laws, reports Bloomberg, which adds that eliminating the estate tax would cost an additional $300 billion over a decade.
Estate tax repeal reportedly has the backing of 46 senators — four short of the number needed to pass the broader tax bill. Legislation to repeal the death tax is also reportedly backed by Ways and Means Chair Jason Smith, most House Republicans, and the National Federation of Independent Business, Bloomberg notes.
John Thune (R-SD) is the sponsor of the Senate version of the bill. In a recent op-ed, Thune wrote that it is inaccurate to frame the estate tax as affecting only the extremely wealthy. He says that cash-poor businesses such as family farms don’t have the liquidity to cover a large tax bill. The “only alternative for heirs in that case,” he wrote, “may be to start selling off land or farm equipment to pay the tax.”
Randy Feenstra (R-Iowa) sponsored the House version of the Death Tax Repeal Act alongside 175 bipartisan co-sponsors.
“By permanently repealing the death tax, my bill will offer financial relief when it’s most needed and ensure that our families, farmers, and small businesses can keep more of their hard-earned money — just as it should be,” he said in a press release.
In addition to a full repeal of the estate tax and the GST tax, both versions of the bill seek the following:
- a permanent gift tax exemption of $10 million (adjusted for inflation),
- a reduction in the gift tax rate from 40 percent to 35 percent, and
- retention of the current capital gains “basis adjustment” that lowers taxes on appreciated assets for the inheritor.
Trump backed a full repeal of the estate tax in 2017 but settled for increasing the exemption. At the time, he faced criticism from the press and political opponents.
Vice President J.D. Vance co-sponsored Thune’s bill to repeal the estate tax while a senator in 2023. Sen. Chuck Grassley (R-Iowa) predicts that the GOP will extend the existing TCJA exemption, rather than repealing the tax altogether.
The latest effort to repeal the estate tax has met familiar arguments, including from Democrats like Former Labor Secretary Robert Reich. His assertion that repeal would “result in a massive tax cut for the wealthiest families and further entrench an American aristocracy” sound straight from a 2016 article that repeal would “create a permanent aristocracy overnight.”
Such criticisms would fit right in a century earlier with calls to “break up the swollen fortunes of the rich,” as Congress put it back in 1916 when first adopting the estate tax.
Though the GOP controls both houses of Congress and has “everything on the table” in their economic package deliberations, according to Senate Finance Committee Chair Mike Crapo (R-Idaho), significant obstacles to repeal remain, including divisions within the GOP about how to structure their budget blueprint.
Repeal could also take place via standalone legislation. However, a slim House majority and the 60-vote filibuster threshold complicate this option as well.
If Republicans can’t get the Senate votes they need to repeal the estate tax, they may rely on budget reconciliation — a procedural process to get a budget bill through Congress without needing to overcome a Democrat filibuster. However, any change implemented through this process must have a 10-year sunset provision. That is, if the change isn’t renewed or made permanent through some other bill, it will end in 10 years.
Plan Proactively to Stay Ahead of Changes
Facing legislative uncertainty, families subject to the estate tax might want to take measures now to stay ahead of potentially lower exemptions in 2026. This could include locking in the currently high estate and gift tax exemptions.
Other strategies to discuss with an estate planning attorney include GST planning, funding a bypass or credit shelter trust, charitable giving, and family limited partnerships.
These strategies aren’t all just for high-net-worth families. Many families can use them to shield assets from creditors, protect children’s inheritances, and navigate political and economic changes.
Planning that focuses on asset protection, like the use of LLCs and revocable trusts, can be discussed alongside tax planning strategies that utilize irrevocable trusts, with an eye toward changing the plan if — or when — needed to hedge against future legal changes.
For guidance that fits your wealth and legacy goals, find a local estate planning attorney.
