What will Trump do about estate tax?

Estate tax in the United States is a federal tax applied to the transfer of a deceased person’s assets before they are distributed to heirs or beneficiaries. It is levied on the total value of an estate that exceeds a specific exemption threshold, which is adjusted annually for inflation. The tax applies to a wide range of assets, including real estate, cash, investments, businesses, retirement accounts, and valuable personal property such as jewelry, art, and collectibles. The estate tax is distinct from an inheritance tax, which is imposed on beneficiaries rather than on the estate itself, and from the gift tax, which applies to large financial gifts made during a person’s lifetime.

As of 2023, the federal estate tax exemption is $12.92 million per individual, meaning that estates valued below this amount are not subject to federal estate taxation. For married couples, the exemption can be combined to allow a total of $25.84 million to be transferred without estate tax liability. Any portion of an estate that exceeds these exemption thresholds is taxed at rates ranging from 18% to 40%, depending on the value of taxable assets. The exemption level is set to decrease after 2025, unless Congress takes action to extend the current limits, which could lead to more estates being subject to taxation in the future.

Several states also impose their own estate or inheritance taxes, independent of the federal tax system. These state-level taxes often have lower exemption thresholds, meaning that estates that do not meet the federal tax requirement may still be taxed at the state level. States such as Maryland and Washington have some of the highest estate tax rates, while other states have no estate tax at all. Because state laws vary, estate planning strategies often take these differences into account to minimize tax burdens.

The estate tax has a long history in the United States, first introduced in 1916 as a way to generate revenue and prevent excessive concentrations of wealth among a small number of families. Throughout the 20th and 21st centuries, estate tax policies have been adjusted numerous times, often influenced by political and economic considerations. In some periods, tax rates were significantly higher, exceeding 70% on the largest estates, while in other periods, exemptions were lower, affecting a broader range of taxpayers. The most recent major change came with the Tax Cuts and Jobs Act (TCJA) of 2017, which significantly increased the exemption threshold, reducing the number of estates subject to federal taxation. However, these provisions are set to expire in 2026, which could lead to changes in estate tax liabilities for high-net-worth individuals and families.

The estate tax is often a topic of political debate, with some policymakers advocating for its repeal, arguing that it discourages investment, family business continuity, and economic growth. Opponents of the tax also refer to it as the “death tax,” claiming that it unfairly penalizes individuals who have accumulated wealth over their lifetimes. Proponents, however, argue that the estate tax helps prevent wealth inequality by ensuring that large fortunes contribute to public revenue rather than being passed down tax-free across generations. They also highlight that only a small percentage of estates—generally fewer than 0.1% of all estates—are subject to the tax due to the high exemption threshold.

There are several legal strategies available to minimize or avoid estate tax liability. One common approach is the use of trusts, which allow individuals to transfer assets while maintaining some level of control and reducing taxable estate values. Charitable giving is another method, as donations to qualified charities are typically exempt from estate taxation. Lifetime gifting under the annual gift tax exclusion allows individuals to transfer wealth gradually without triggering significant tax consequences. Another approach is the generation-skipping transfer tax (GSTT), which applies when assets are passed directly to grandchildren or further generations, avoiding estate taxation at the intermediate level.

Estate tax planning is a key consideration for high-net-worth individuals and business owners, particularly those with family-run businesses or large real estate holdings. Without proper planning, heirs may be required to sell assets to cover tax liabilities, which can disrupt business operations or result in the loss of inherited wealth. Financial advisors and estate planners often work with clients to develop strategies that balance asset protection, tax efficiency, and legacy planning.

The future of the estate tax remains uncertain, as political shifts and economic conditions continue to shape tax policy discussions. Upcoming elections, legislative changes, and public attitudes toward wealth distribution will determine whether the estate tax structure remains in place, is expanded, or is reduced in scope. Individuals with significant estates should stay informed about changes in tax laws and consider proactive planning to manage their estate tax exposure effectively.

Donald Trump’s tax policies have consistently focused on reducing or eliminating the estate tax, aligning with his broader economic philosophy of lowering taxes to encourage investment and wealth preservation. During his 2016 presidential campaign, Trump proposed abolishing the estate tax entirely, arguing that it unfairly penalized families and business owners who wanted to pass down wealth to future generations. While his administration did not fully repeal the estate tax, it made significant changes through the Tax Cuts and Jobs Act (TCJA) of 2017, which increased the federal estate tax exemption. The exemption amount was doubled, allowing individuals to pass on up to $11.2 million tax-free in 2018, with adjustments for inflation in subsequent years. As of 2025, the exemption has grown to $13.99 million per individual, or $27.98 million for married couples.

These increased exemption levels are scheduled to expire on December 31, 2025, at which point the exemption will revert to pre-2018 levels, adjusted for inflation. This means that unless legislative action is taken, the exemption could drop to approximately $7 million per individual, resulting in more estates becoming subject to taxation. Trump has made it clear that one of his tax priorities, if re-elected, would be to extend these higher exemption levels permanently, preventing the scheduled reduction and maintaining the current 40% tax rate on amounts exceeding the exemption threshold.

During his 2024 campaign, Trump emphasized the need to extend the TCJA provisions, including estate tax reforms, to prevent what he described as an impending tax increase on American families and businesses. His administration previously framed the estate tax as a burden on family-owned businesses and farms, arguing that it forced heirs to sell off assets to cover tax liabilities. Trump and his Republican allies believe that eliminating or further reducing the estate tax would help preserve generational wealth, stimulate business continuity, and encourage investment.

Critics of Trump’s estate tax policies argue that extending or further reducing the estate tax disproportionately benefits the wealthiest Americans, as only a small percentage of estates are currently subject to taxation. The U.S. Treasury Department has analyzed the impact of extending the TCJA provisions and found that the top 0.1% of earners could see substantial tax reductions, with a potential individual tax cut of $314,000 per year. Over the next decade, making the tax cuts permanent could result in a $4.2 trillion loss in federal revenue between 2026 and 2035, potentially increasing the federal deficit. Opponents argue that these lost revenues could otherwise be used to fund infrastructure, social security, healthcare, or other public programs.

In addition to estate tax reductions, Trump has also supported other tax policies that could impact wealth transfer and inheritance planning. One area of focus is capital gains taxes, particularly the tax on unrealized gains at death, which some Democratic lawmakers have proposed as an alternative way to tax inherited wealth. Trump has strongly opposed such measures, positioning himself as a defender of low taxation on wealth transfers. He has also promoted stepped-up basis rules, which allow inherited assets to be valued at their market price at the time of inheritance rather than their original purchase price, effectively reducing capital gains tax liabilities for heirs.

Another key area of Trump’s tax agenda is trade policy, which indirectly affects estate taxation through economic growth and asset valuation. Trump has introduced higher import tariffs, arguing that they will strengthen American industries and create jobs. However, tariffs can also increase inflation and affect asset values, which may have implications for estate planning and taxable estate sizes. If tariffs lead to higher prices and reduced corporate profits, they could impact stock markets and business valuations, influencing the amount of wealth passed down through estates.

The future of the estate tax under Trump’s policies will depend on Congressional control and broader economic conditions. If Republicans gain control of Congress, they are likely to pursue an extension of the TCJA provisions, ensuring that the higher estate tax exemption remains in place. If Democrats retain influence, they may push for the exemption to return to lower levels or introduce new wealth taxation measures to increase federal revenues. Trump’s stance on the estate tax aligns with his broader economic vision of reducing government intervention, lowering taxes on businesses and wealthy individuals, and promoting a free-market approach to economic growth. However, the long-term effects of these policies remain a subject of debate, with ongoing discussions about how they impact economic inequality, federal debt, and generational wealth transfer.