Saturday, April 28, 2018
Rice University Baker Institute for Public Policy, The Estate Tax After the 2017 Tax Act:
Although Benjamin Franklin once stated that death and taxes are the only certainties in life, the timing of death and the amount of taxes owed are certainly not. The Tax Cuts and Jobs Act of 2017 (TCJA, Pub. L. 115–97) leaves the federal wealth transfer tax system in place, but temporarily doubles the exclusion amount for estate and gift taxes to $11.18 million per individual or $22.36 million per married couple until the end of 2025. In 2026, absent congressional action, the base exclusion amount will revert to $5 million, indexed for inflation. This issue brief examines the implications of this change for taxpayers as well as its impact on federal and state governments.
Given the current political environment, the government deficit levels, the recency of the increased exclusion amount in 2017, and the perceived wealth concentration in the U.S., a targeted full repeal of the federal estate tax is unlikely in the next few years. However, a reversal to the pre-TCJA low exclusion level is equally unlikely, at least until the next presidential election