Rep. Jason Smith (R-Missouri) speaks during the House Oversight and Accountability Committee’s impeachment inquiry hearing against U.S. President Joe Biden on September 28, 2023.
Jonathan Ernst | Reuters
House Republicans reintroduced a bill this week that would permanently eliminate what they call the “death tax,” or federal estate tax on inherited assets over a certain value.
The Death Tax Repeal Act, introduced by Rep. Randy Feenstra, R-Iowa, with the support of 162 senators, is part of the previous Republican proposals to repeal the estate tax, including a Senate bill starting in early 2023. This follows on from the proposal of
House Ways and Means Committee Chairman Jason Smith (R-Missouri) said in a statement Thursday that “families that have spent a generation building successful farms, ranches, and small businesses should be rewarded, not penalized, by the tax system. ” to applause. invoice.
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However, there is no bipartisan support for repealing the estate tax, and experts say it is unlikely to pass through the current divided Congress.
“It seems like it’s mostly a messaging play here trying to bring these ideas to the forefront,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation. “This is a great reminder, especially as she approaches the 2025 debate.”
The federal estate tax exemption will be adjusted for inflation and increase to $13.61 million per individual and $27.22 million per spouse in 2024. Real estate exceeding this amount will be subject to a tax of up to 40%.
But those limits will drop by about half starting in 2025, when provisions of the tax reform signed by former President Donald Trump in 2017 are repealed.
“The impact on revenue is relatively small, so there may be more room for reductions.” [the estate tax] If they had full control, they totally would,” Watson said.
Who pays federal estate tax?
“In a sense, [the federal estate tax] It’s already gone,” said Robert McClelland, senior fellow at the Urban-Brookings Tax Policy Center, noting that most Americans are not affected by the tax.
Approximately 2,100 tax returns (representing 0.08% of adult deaths in the U.S.) were subject to federal estate tax in 2019, according to the latest IRS data.
“This is not something the average American, or even the average wealthy American, should be concerned about,” McClelland said.
Some Republicans argue that the federal estate tax burdens family farms and small businesses, but most say they are not affected.
The U.S. Department of Agriculture’s Economic Research Service estimated that 0.22% of 39,534 farms with a principal owner death in 2022 will pay inheritance tax. Of course, the need to file inheritance tax returns largely depends on the size of the farm, the USDA noted.
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