Congress Considering Full Repeal of Estate Tax in 2025: What You Need to Know

Key Takeaways

• Republicans are pushing to repeal the federal estate tax through the Death Tax Repeal Act of 2025, arguing it burdens family businesses and farms, while Democrats maintain it's essential for reducing wealth concentration.
• The estate tax currently affects only about 0.1-0.2% of Americans but remains a contentious issue in tax policy debates.
• The current exemption of $13.99 million for individuals ($27.98 million for married couples) is set to decrease significantly after 2025 unless Congress takes action.
• Proactive estate planning strategies can help families navigate potential changes to estate tax laws.

The Latest Push to Eliminate the "Death Tax"

Republicans in Congress have launched a renewed effort to permanently abolish the federal estate tax, which they've strategically branded as the "death tax" in their campaign to overturn a tax that affects relatively few Americans but remains at the center of heated debates over wealth taxation in the United States.

The Death Tax Repeal Act of 2025, introduced simultaneously in the House of Representatives and Senate this February, represents the latest GOP-led initiative to permanently eliminate taxation on property transfers at death. Both versions of the bill also seek to abolish the generation-skipping transfer (GST) tax while maintaining the permanent lifetime gift tax exemption and the step-up in basis for inherited assets.

This repeal effort could potentially be incorporated into a comprehensive economic package that Republicans aim to approve in the coming months, particularly as numerous provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are scheduled to expire at the end of 2025.

Understanding the Estate Tax: A Small But Symbolic Revenue Source

The federal estate tax, which has been applied to property transfers at death since 1916, has consistently served dual purposes: generating revenue and redistributing wealth. According to IRS data, only about 0.1 to 0.2 percent of Americans—approximately 3,000 to 4,000 estates annually—actually pay estate taxes.

In 2025, the tax applies to estates valued over $13.99 million for individual filers and $27.98 million for married couples, with a top rate of 40 percent. Estate tax revenues totaled $24 billion in 2023, representing roughly 0.1 percent of the gross domestic product.

The Center on Budget and Policy Priorities (CBPP) describes the estate tax as "the most progressive part of the U.S. Tax Code." Although it generates less than 1 percent of federal revenue, the CBPP considers it "significant" in the broader tax landscape.

Conversely, the Tax Foundation characterizes the estate tax as a "small, relatively inconsequential piece of the federal tax system." They argue that eliminating it would "lower taxes on the wealthiest Americans—but not by much." The Foundation further contends that despite affecting relatively few estates directly, many estates face administrative costs related to compliance, and the economy experiences reduced investment and growth due to the tax.

The CBPP counters that estate tax compliance costs are actually modest, and any potential gains in private savings and investment from repealing the tax would likely be offset by increased government borrowing.

A Century-Long Debate: The Historical Context

The arguments surrounding the estate tax echo debates that have persisted for more than a century. Supporters maintain that it helps reduce wealth concentration by taxing large inheritances, while opponents claim it unfairly burdens American farmers and small-business owners.

Early versions of estate taxation in the United States were primarily pragmatic revenue-generating measures rather than ideologically driven policies. The Stamp Act of 1797 imposed taxes on wills and estates to fund naval expansion during tensions with France but was repealed by 1802. During the Civil War, another iteration emerged in 1862, taxing inheritances to support the Union's war effort before being phased out by 1870.

The federal government established a permanent federal estate tax in 1916, imposing a top rate of 10 percent on estates exceeding $5 million (approximately $140 million in today's dollars) amid growing concerns about wealth concentration. Industrial magnates like Carnegie and Rockefeller epitomized the Gilded Age's inequality, and the tax partly responded to populist calls to curb dynastic wealth. Influential thinkers including Henry George and Theodore Roosevelt argued that concentrated land and wealth undermined democratic principles.

Early critics characterized the estate tax as a "soak-the-rich" scheme. However, repeal efforts gained little momentum until after World War II, when the postwar economic boom reduced the urgency for high taxation levels.

The modern repeal movement accelerated with the 1997 Taxpayer Relief Act, which began raising the exemption threshold. The "death tax" label—coined by Republican strategists like Frank Luntz—effectively framed the estate tax as unfair double taxation (since income is taxed before death). The 2001 Tax Relief Reconciliation Act further increased the exemption, reduced the rate, and scheduled a complete repeal for 2010—which briefly occurred due to a combination of legislative sunsetting provisions and political inaction.

The estate tax returned in 2011, and under the Trump-era TCJA, the exemption increased to historically high levels. However, this exemption is set to revert to inflation-adjusted pre-TCJA levels of approximately $7 million per person after 2025—unless Republicans in Congress succeed in their current efforts.

The 2025 Death Tax Repeal Act: Details and Prospects

Republican lawmakers in both the House and Senate introduced the Death Tax Repeal Act on February 13, 2025. According to law firm Koley Jessen, versions of this Act have been introduced annually since 2015. This year's versions are reportedly being positioned as part of a $4.5 trillion tax blueprint to extend Trump's 2017 tax laws. Bloomberg reports that eliminating the estate tax would cost an additional $300 billion over a decade.

The estate tax repeal reportedly has the support 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.

Senator John Thune (R-SD), the sponsor of the Senate version, recently argued in an op-ed that it's inaccurate to frame the estate tax as affecting only the extremely wealthy. He contends that cash-poor businesses such as family farms lack the liquidity to cover substantial tax bills. "The only alternative for heirs in that case," he wrote, "may be to start selling off land or farm equipment to pay the tax."

Representative Randy Feenstra (R-Iowa) sponsored the House version 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 stated in a press release.

Both versions of the bill seek:

• Complete repeal of the estate tax and GST tax
• A permanent gift tax exemption of $10 million (adjusted for inflation)
• Reduction of the gift tax rate from 40 percent to 35 percent
• Retention of the current capital gains "basis adjustment" that reduces taxes on appreciated assets for inheritors

Former President Trump supported a full repeal of the estate tax in 2017 but ultimately settled for increasing the exemption. Vice President J.D. Vance co-sponsored Thune's bill to repeal the estate tax while serving as a senator in 2023. Senator Chuck Grassley (R-Iowa) predicts that the GOP will extend the existing TCJA exemption rather than repealing the tax entirely.

The latest repeal effort has encountered familiar counterarguments, including from Democrats like former Labor Secretary Robert Reich, who asserts that repeal would "result in a massive tax cut for the wealthiest families and further entrench an American aristocracy." Such criticisms echo concerns from a century ago about the need to "break up the swollen fortunes of the rich," as Congress expressed when first adopting the estate tax in 1916.

Despite Republican control of both houses of Congress and their stated intention to keep "everything on the table" in 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 occur through standalone legislation. However, a slim House majority and the 60-vote filibuster threshold in the Senate complicate this approach as well.

If Republicans cannot secure the necessary Senate votes for estate tax repeal, they may resort to budget reconciliation—a procedural process to advance a budget bill through Congress without needing to overcome a Democratic filibuster. However, any change implemented through this process must include a 10-year sunset provision, meaning the change would expire after a decade unless renewed or made permanent through subsequent legislation.

Proactive Planning Strategies for an Uncertain Future

Given the legislative uncertainty surrounding estate taxes, families potentially subject to these taxes should consider taking proactive measures now to prepare for possible changes, including the potential reversion to lower exemptions in 2026. This might include strategies to lock in the currently high estate and gift tax exemptions.

Additional strategies to discuss with an estate planning attorney include:

1. Generation-skipping transfer planning to preserve wealth for future generations
2. Funding bypass or credit shelter trusts to maximize exemption amounts for married couples
3. Strategic charitable giving to reduce taxable estates
4. Establishing family limited partnerships to facilitate wealth transfers with potential valuation discounts
5. Creating irrevocable trusts to remove assets from taxable estates

Importantly, these strategies aren't exclusively for high-net-worth families. Many families can use them to protect assets from creditors, safeguard children's inheritances, and navigate political and economic changes effectively.

Planning that focuses on asset protection, such as utilizing LLCs and revocable trusts, can be implemented alongside tax planning strategies involving irrevocable trusts, with flexibility to modify the plan as needed to adapt to future legal changes.

Conclusion: Stay Informed and Plan Accordingly

The debate over estate tax repeal highlights the ongoing tension between wealth preservation and redistribution in American tax policy. While the outcome remains uncertain, understanding the potential changes and implementing flexible planning strategies can help families protect their assets and legacies regardless of legislative developments.

For personalized guidance tailored to your wealth and legacy goals, please contact our experienced estate planning attorneys. We can help you navigate these complex issues and develop a comprehensive plan that addresses your specific needs while remaining adaptable to evolving tax laws.

This article was last updated on April 27, 2025, reflecting current legislative proposals and estate tax considerations.