Death Now Costs Less
The certainty of death and taxes brings a double blow to grieving families and at the worst possible time. And those troubling circumstances would be much worse if the Working Families Tax Cuts (WFTC) had not saved the death tax exemption from being cut in half on December 31, 2025. Thanks to President Trump and Republicans in Congress, the WFTC raised the exemption and made it permanent with the threshold increased for inflation.
The 2017 Tax Cuts and Jobs Act (TJTA) doubled the threshold for the estate tax but like other tax cuts in the legislation, it was scheduled to expire on December 31, 2025. The minimum estate subject to the tax was $13.99 million for individuals and $27.98 million for couples in 2025 and would have been cut to $7 million and $14 million beginning on January 1, 2026. But the WFTC permanently raised the minimum to $15 million for individuals and $30 million for couples, adjusted for inflation.
The rate is 18 percent on the first $10,000 over the exemption amount and gradually increases to 40 percent on amounts greater than $1 million above the threshold.
However, in addition to the federal tax on an estate, states also impose such taxes. According to the Tax Foundation, “12 states and the District of Columbia impose estate taxes, while five states levy inheritance taxes.” The states are Connecticut, Hawaii, Illinois, Kentucky, Maine, Maryland (the only state with both taxes), Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington. Connecticut is the only state that matches the federal estate tax exemption, while Oregon has the lowest threshold of $1 million.
Despite the small number of states that tax upon death and continued efforts to reduce or eliminate such taxes, New York City Mayor Zohran Mamdani, consistent with his socialist principles, is pushing state legislators to decrease the estate tax threshold by 90 percent, from $7.3 million to $750,000, and increase the top marginal rate from 16 percent to a national high of 50 percent. That would push the estate tax onto millions of middle-class New Yorkers who could be forced to sell their businesses, homes, or both, to pay the estate tax.
In 2005, the Council for Citizens Against Government Waste President Tom Schatz noted, “Americans hate the death tax for a simple reason: It taxes assets that have already been taxed. People who have worked and paid taxes their entire lives have the right to pass on their earnings to whomever they choose, without politicians taking a cut for pork-barrel projects.”
What held true then rings true today. The estate tax provisions in the WFTC are a good start but it would be better to permanently eliminate the federal death tax. That would send a strong message to state and local government officials like Mayor Mamdani to stop pushing higher rates and lower thresholds to fill their coffers for increased spending in compete disregard and little sympathy for adding even more pain to families who will be hit with these taxes at a distressing time.
