The Beginning of the End (The Death Tax Repeal Act)

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Feb 16

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The Death Tax Repeal Act

On February 13, 2025, a bill was introduced in Congress that could change everything forever but also keep everything exactly the same (for most people).

This bill, called the Death Tax Repeal Act, was introduced in the House by Representatives Randy Feenstra of Fourth District of Iowa and in the Senate by Senator John Thune of South Dakota.

“What would this bill do that would change everything forever?” You might ask. Well, I’ll tell you. It’ll repeal the federal estate tax, hence the name. It’ll change other taxes as well, but for the purposes of this article, we’ll focus on the repeal of the federal estate tax.

Is There a Death Tax?

To be fair, the federal estate tax is levied when someone dies, the date of death is the basis for determining the value of the estate, fair market value of the decedent’s assets, and the amount of tax due, if any. So, calling it a death tax is not inaccurate.

But most people never have to worry about being taxed when they die. At least, not by the federal government.

The federal estate tax is not levied on estates under a certain amount. This amount is called the Federal Estate Tax Exemption.

If your estate is under the Federal Estate Tax Exemption, you do not have to worry about the Federal Estate Tax.

What is the Federal Estate Tax Exemption in 2025?

What is the amount of the Federal Estate Tax Exemption? Currently, it’s 13.99 million dollars. So, if the value of your estate is under 13.99 million dollars, you do not need to worry about owing any estate taxes to the Internal Revenue Service.

If that’s you, you’re not alone. The overwhelming majority of people in the United States do not have an estate that comes close to the amount of the Federal Estate Tax Exemption.

The Federal Estate Tax and Politics

So, if it doesn’t apply to the overwhelming majority of people, why does it make the news? It’s because the amount of the Federal Estate Tax Exemption is a politically motivated number. The reason I say it’s politically motivated is the amount tends to increase or decrease depending on which political party is in control.

Trump 1.0: Doubling the Federal Estate Tax Exemption and the 2026 Sunset

During President Trump’s first term in office, the amount of the Federal Estate Tax Exemption was doubled as part of the Tax Cut and Jobs Act of 2017 taking it from the 5.5-million-dollar range to the 11-million-dollar range unitl 2026, at which point it would "sunset" or return to the $5.5 millon range.

Quite literally, the text of the statute doubled the number used to calculate the estate tax by substituting $10,000,000 for $5,000,000 (subsequent increases are due to the Federal Estate Tax Exemption being indexed for inflation.)

The Biden-Harris Approach to the Federal Estate Tax

The Biden Administration tried to lower the Federal Estate Tax Exemption Amount to around 3.5 million dollars, which would have made it lower than it was during the Obama Administration but was unsuccessful. Kamla Harris had endorsed the Biden Administration’s plans for the Federal Estate Tax Exemption as part of her own presidential campaign in 2024.

Trump 2.0: Repeal It All Together

And now, during President Trump’s second term, the effort is being made to repeal the Federal Estate Tax forever. And given that the party in favor of repealing it controls the presidency and both houses of Congress, there's a great chance they'll succeed.

It's Grandstanding

It’s also a politically motivated number because it’s easy to grandstand on it.

If you lean left, reducing the amount of the Federal Estate Tax Exemption means “everyone pays their fair share.”

If you lean right, increasing, or eliminating, the amount of the Federal Estate Tax Exemption amount means “it not fair to be taxed just because you died.”

It Doesn't Affect Most Americans

It’s grandstanding because regardless of which party is in power, the amount of the Federal Estate Tax Exemption is never an amount that would affect the average American. Even the Biden Administration’s desired amount of $3.5 million is three times more than the value of the average American’s estate, which, according to data from the U.S. Federal Reserve, was $1,063,700 in 2022.

It Doesn't Generate Significant Revenue

The Federal Estate Tax Exemption is also easy to grandstand on because it’s not a money maker. According to the Congressional Budget Office, federal estate and gift taxes brought in $17.6 billion in 2020. That sounds like a lot of money, and it is, but remember, the federal government spends about $7 trillion in its fiscal year.

In American English, a trillion means a thousand billion. So, seven trillion is 7,000 billion. Divide 17.6 by 7,000 and convert to a percentage to see that it equals roughly .25%. It’s one-fourth of one percent. You could double it or get rid of it, and it would not have a meaningful effect on the federal government’s ability to operate.

That’s not to say high net worth individuals shouldn’t worry or care about the federal estate tax. They should because it affects them, and they have every right to reduce their tax burden.

It is their money after all.

But it’s also important to be aware of when something affects you and when it doesn’t, so you know how much attention to give it.

Does the Death Tax Repeal Act Affect State-Level Estate or Inheritance Taxes?

Another thing to note is that the Death Tax Repeal Act does not, as of the publishing of this article, on February 17, 2025, affect the legality of estate or inheritance taxes levied by the states.

Twelve states have an estate tax.

They are Hawaii, Washington, Oregon, Minnesota, Illinois, New York, Massachusetts, Connecticut, Rhode Island, Vermont, Maine, and Maryland.

Additionally, six states have an inheritance tax, which is levied on the person who inherits from an estate and not the person that dies.

They are Nebraska, Iowa, Kentucky, Pennsylvania, New Jersey, and Maryland (yes, the state of Maryland levies both an estate tax and an inheritance tax.)

So, if (well, let’s be honest, when) the Death Tax Repeal Act gets passed, if you live in one of these states, you could still have estate or inheritance tax issues, they just won’t be from the federal government.

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