On February 13, 2025, U.S. Representative Randy Feenstra (R-Iowa) introduced the Death Tax Repeal Act in the House, with over 170 representatives signing on. At the same time, Senate Majority Leader John Thune (R-S.D.) filed a companion bill in the Senate, supported by 44 senators. The legislation seeks to eliminate the federal estate tax—often labeled the “death tax”—and the generation-skipping transfer tax (GSTT), while maintaining a modified gift tax structure. With the 2025 estate tax exemption at $13.99 million per person—slated to drop to roughly $7 million in 2026 unless Congress intervenes—this move targets relief for the wealthiest 0.2% of estates. The catch: how do they replace the lost revenue, which, while less than 1% of total federal revenues, still clocks in at $30–40 billion annually? Let’s break it down.
Feenstra and Thune argue this tax is a relic that punishes family farms, small businesses, and multigenerational wealth. Feenstra, rooted in Iowa’s rural heartland, paints a stark picture: heirs selling off century-old farms to cover a 40% tax on assets above the exemption. Thune, repping South Dakota’s ranch country, piles on—land-rich but cash-poor operations get hammered, threatening local economies. Their solution? Scrap the estate and GST taxes entirely, preserve the step-up in basis (resetting inherited assets’ value to dodge capital gains tax), and cap the lifetime gift tax exemption at $10 million with rates up to 35%. It’s a clean sweep meant to unlock capital and boost growth.
Opponents counter that the tax’s reach is narrow—IRS data shows fewer than 100 farm estates paid it in recent years—and its repeal would mostly benefit high-net-worth individuals and foreign investors, who could acquire U.S. assets tax-free. The current exemption already shields most estates, raising questions about whether the tax’s impact is as widespread as claimed. While the revenue loss is small in the grand scheme—under 1% of the federal budget’s $4–5 trillion—it still requires consideration, especially as fiscal priorities shift across administrations.
Neither bill specifies how to offset the $30–40 billion annual shortfall. Supporters suggest economic growth could fill the gap, pointing to increased investment and taxable activity from untaxed wealth. They reference the 2017 Tax Cuts and Jobs Act, which raised exemptions without immediate revenue replacements, anticipating broader economic gains (though the results remain debated). Alternatives like adjusting other taxes or spending cuts might emerge in negotiations, but for now, the focus is on repeal rather than replacement.
This is a high-octane bet: slash a tax that hits few but stings hard, and hope the economy picks up the slack. Feenstra and Thune are banking on momentum and political muscle to push it through. Whether it holds depends on if that growth materializes—or if future lawmakers scramble to patch the hole. For now, it’s a proposal long on ambition, with the details still unfolding.