Estate Tax Rate Reduction Act

Summary

Sets a single flat tentative estate tax rate of 20% for computing federal estate tax and updates related Internal Revenue Code cross-references to reflect a single rate. The change applies to estates of decedents dying and to generation-skipping transfers and gifts made after December 31, 2024, and the bill instructs that its budgetary effects be excluded from certain PAYGO scorecards.

• Replaces graduated federal estate tax rate tables with a single tentative estate tax rate of 20%.
• Applies to decedents dying and to generation-skipping transfers and gifts after December 31, 2024.
• Makes conforming amendments across the Internal Revenue Code to refer to a single rate and to define the applicable rate for GST calculations as the estate rate times the inclusion ratio.
• Does not change the federal estate tax exemption amount or other deduction and valuation rules.
• Directs that the bill's budgetary effects be excluded from certain PAYGO scorecards.
• Simplifies the tax-rate lookup but will increase or decrease liability depending on where prior graduated rates fell relative to 20%.
• Requires administrative updates by the IRS and will affect estate planners, tax preparers, and affected taxpayers.
• May indirectly affect state tax calculations in jurisdictions that reference federal estate tax law.