Sponsors (3)
The bill simplifies and streamlines estate tax calculations and administration by imposing a single 20% rate, but that simplification likely raises taxes for many estates and GSTs, increases planning costs for affected taxpayers, and reduces fiscal transparency.
Taxpayers (estates and heirs): replaces a multi‑bracket estate tax table with a single 20% rate, making estate tax liability easier for individuals to calculate.
Estate executors, financial institutions, and the IRS: reduces compliance and administrative complexity by removing a graduated rate schedule and harmonizing cross‑references, lowering time and effort needed to administer estate taxes.
Heirs of larger estates and affected taxpayers: a flat 20% rate can raise estate tax bills compared with the current graduated schedule, increasing tax liabilities for many estates.
People making generation‑skipping transfers (GST taxpayers): applying an applicable rate equal to 20% times the inclusion ratio may increase tax on some GSTs versus prior highest‑bracket calculations.
Taxpayers and small‑business owners: could face higher tax‑planning and advisory costs as individuals and advisors adjust estate and GST planning to the new flat rate and altered calculations.
Based on analysis of 2 sections of legislative text.
Replaces the graduated federal estate tax rate schedule with a flat 20% rate and makes conforming code edits for estates, GSTs, and gifts after Dec 31, 2024.
Official title: To amend the Internal Revenue Code of 1986 to reduce the rate of tax on estates, gifts, and generation-skipping transfers.
Introduced January 22, 2025 by Jodey Cook Arrington · Last progress January 22, 2025
Replaces the current graduated federal estate tax rate schedule with a flat 20% rate for computing the tentative estate tax and makes conforming edits across the Internal Revenue Code. The change applies to estates of decedents, generation-skipping transfers, and gifts made after December 31, 2024, and the bill specifies that its budgetary effects will not be entered on certain PAYGO scorecards.