Congress Plans Estate Tax Breaks: How $15M Exemption Affects You
Big changes may be coming to U.S. taxes, and one of them has to do with something called the “estate tax.” Lawmakers in Congress are trying to raise the amount of money that wealthy people can pass on without paying any estate tax. But what does that really mean for everyday families? And who benefits the most?
Let’s break it all down in simple terms.
What Is the Estate Tax?
The estate tax is a special tax the government can take when a person dies and leaves behind a lot of money or property. This includes things like homes, cars, savings, stocks, or even businesses.
Right now, if someone passes away and their total assets (everything they own) are worth more than about $13.6 million, their family might have to pay estate tax. If they’re married, the number is doubled—so $27.2 million. Anything under that amount isn’t taxed.
That means most people never have to worry about the estate tax. But for the very rich, it can be a big deal.
What Is Changing?
Congress, which is led by the Republican Party right now, wants to raise the exemption even higher.
The plan is to:
- Increase the exemption to $15 million for individuals
- Or $30 million for married couples
This means wealthy families can pass on even more money without paying any estate tax at all.
The goal, according to supporters, is to help families keep more of what they’ve earned and to avoid breaking up family-owned businesses or farms when someone dies.
Why Are People Upset?
Not everyone thinks this is a good idea.
Here’s why:
- Only the Rich Benefit
Most Americans will never have $15 million, let alone $30 million. That means this change helps only a small group of people—about the top 0.1% of all families. - Less Money for the Government
Experts say this change could cost the government about $210 billion over the next 10 years. That’s money that won’t be used for schools, roads, healthcare, or helping families in need. - It Could Make Wealth Gaps Worse
Critics worry that letting rich families pass on more money without taxes will make the rich even richer. Poor and middle-class families don’t have this kind of wealth to pass on, so the gap between the rich and everyone else could grow even larger.
What Do Supporters Say?
People who support the change say it’s about fairness. They believe families should be able to pass on what they worked hard for, without the government taking a chunk of it.
They also say it’s especially important for:
- Small business owners
- Farmers
- Family companies
Sometimes, these families have to sell land or shut down their business just to pay estate taxes when someone dies. Supporters think raising the limit will help protect these families and their legacies.
What Does This Mean for You?
If you’re not a millionaire, you might think this doesn’t affect you. And you’re partly right. Most people won’t ever pay estate tax, even under the old rules.
But this change can still affect your life in other ways.
1. Less Government Funding
If the government collects less money from estate taxes, it might have to find money elsewhere. That could mean:
- Higher taxes on wages or sales
- Cuts to public services like schools or safety net programs
2. Wider Wealth Gap
When rich families pass down more money tax-free, their children start life with a big head start. Over time, this can lead to fewer opportunities for people who aren’t born into wealth.
3. Policy Trade-Offs
Lawmakers have to decide what matters most—helping wealthy families keep more money, or using that money to support everyone else. It’s a tough balance.
How Common Is the Estate Tax?
Not very.
In fact, fewer than 2,000 estates were large enough to pay any estate tax in 2023. That’s out of millions of deaths each year.
So, while it’s a big deal for the very wealthy, it’s not something most families ever face. Still, the estate tax plays an important role in making sure the tax system is fair and balanced.
What’s Next?
The proposal to raise the estate tax exemption is part of a larger tax package being pushed by Congress. It still needs to be passed by both the Senate and the House of Representatives before it becomes law.
There will likely be a lot of debate in the coming months. Lawmakers will need to decide:
- How much tax relief should the richest Americans get?
- How will the government make up for the lost revenue?
- What does a fair tax system really look like?