With Republican leaders calling for repealing the federal estate tax in the upcoming tax debate, we’ve updated our estimates showing that the tax affects very few estates in each state and that its repeal would provide windfall tax cuts to the wealthiest heirs (see table).
The estate tax applies only to the value of an estate that exceeds $5.5 million per person ($11 million per couple). That’s more than middle-income Americans typically earn in a lifetime. Nationally, just 5,400 estates — the wealthiest 0.2 percent of Americans who die — will owe any estate tax in 2018, Congress’ Joint Committee on Taxation estimates. And while President Trump called the tax a “tremendous burden” for small businesses and family farms, only 50 such estates will face it.
Repeal would provide millions of dollars in tax cuts to the wealthiest estates and their heirs. Under a 2015 proposal that lawmakers re-introduced this year in both the House and Senate, taxable estates in 2018 would receive an average tax cut of more than $3 million. The 344 estates worth at least $50 million would receive tax cuts averaging over $20 million apiece. The proposal would also cost $269 billion over a decade, expanding deficits and, as a result, adding to pressure for cuts in federal programs.
|A State-by-State Look at the Federal Estate Tax|
|Number of taxable estates in 2018||As percent of total estates|
|District of Columbia||10||0.3%|
* Data deleted by IRS to prevent disclosure of individual taxpayer information due to small number of estates.
Note: Estimates are rough given the small numbers of estates paying the tax each year. Figures are rounded to the nearest ten estates and the nearest tenth of a percent.
Source: CBPP based on Internal Revenue Service (IRS), Joint Committee on Taxation (JCT), Centers for Disease Control and Prevention (CDC), and Census. For the number of taxable estates, we assume that each state’s share of the JCT estimate for 2018 would be the same as in the IRS data of estate tax returns filed in 2015. For the total number of estates, we apply the CDC estimates of adult deaths and total population in 2015 by state to the Census estimate of U.S. population for 2018.