Senate Majority Leader pushes full repeal of estate tax

Senate Majority Leader John Thune endorsed a full repeal of the estate tax, identifying the elimination of the levy on the fortunes of some of the wealthiest Americans as Republicans draft a massive economic package.

“I continue to advocate for eliminating the death tax once and for all, so no farmer or rancher has to worry about whether the family farm or ranch will be able to stay in the family after they pass,” the South Dakota Republican said on the Senate floor Wednesday. 

Thune’s push for repealing the 40% tax on the wealth of the richest US individuals when they die puts the effort — a longtime goal of the Republican party — at the center of negotiations over the size and scope of a massive tax cut bill.

Republicans are aiming to approve a multi-trillion tax bill in the coming months that renews President Donald Trump’s 2017 cuts, along with a fresh round of levy reductions. House and Senate Republicans are currently negotiating the size of the tax package, which will determine how many new cuts can become law.

The party has a long and growing list of expensive tax changes, and constraints on the overall size of the bill mean they won’t be able to include every desired item. Trump has proposed a series of cuts, including eliminating taxes on tips, overtime pay and Social Security benefits. And a contingent of House lawmakers are advocating to expand the state and local tax deduction, in addition to Thune’s priorities.

The estate tax affects only a small segment of taxpayers, but has gained political significance with Republicans branding it a “death tax” and saying it inhibits farmers and other small business owners from passing on their assets to their children. In 2022, 3,170 estates — about 0.1% of Americans — paid estate tax at death, according to Internal Revenue Service data. 

Current estate tax levels mean that an individual’s estate can pass up to $13.99 million tax-free on to their heirs, or twice that for a couple. The top tax rate is 40% on assets, though many billionaires and other wealthy people have long exploited legal loopholes to avoid paying it.

Political Momentum

Estate tax repeal has strong support in the Senate. It’s backed by 46 senators so far, four shy of the 50 votes that will be needed to pass the broader tax bill. Similar legislation has the backing of Ways and Means Chair Jason Smith, most House Republicans and the National Federation of Independent Business.

Eliminating the estate tax would cost an additional $300 billion over a decade, according to Marc Goldwein of the Committee for a Responsible Federal Budget. That would be on top of the $4.5 trillion envisioned in a House tax blueprint to extend Trump’s 2017 tax law. The Senate is in the midst of negotiating their own plan for the bill.

In 2017, Trump backed a full repeal of the estate tax, but settled for increasing the exemption level so wealthy individuals could pass on more — but not all — of their fortune to their heirs tax-free. Those higher limits expire at the end of 2025 unless Congress acts.

Senator Chuck Grassley, an Iowa Republican, predicted that the GOP would ultimately extend the existing exemption, rather than repealing the estate tax outright.

Senate Finance Committee Chair Mike Crapo, who also supports eliminating the estate tax, declined to put odds on a repeal making it in to the package in a brief interview this week after a meeting of House and Senate leaders and administration officials.

“Until the bill is drafted, everything is on the table and nothing’s on the table,” he said.

Vice President JD Vance, who has the power to break ties as president of the Senate, co-sponsored Thune’s bill to repeal the tax while a senator in 2023. Thune has also picked up the backing of four wealthy, Trump-backed Republican businessmen who last year won Senate seats previously held by Democrats, Dave McCormick of Pennsylvania, Bernie Moreno of Ohio, Jim Justice of West Virginia and Tim Sheehy of Montana.