Under current law, the first $5.45 million ($10.9 million for married couples) of an estate is exempt, while the remainder is taxed at a 40 percent rate. The exemption level is indexed to inflation.
Impact on Educational Institutions
Studies by the Congressional Budget Office and the Brookings Institution suggest that full repeal of the estate tax would reduce charitable giving by 6 to 12 percent per year and reduce bequests by 16 to 28 percent. Research suggests that increasing the exemption to $2 or $3.5 million would reduce charitable giving by less than 3 percent but that lowering the estate tax rate would result in more significant decreases in charitable giving.
During the past two decades, bequests have represented between 17 and 25 percent of all personal giving received by educational institutions. Deferred gifts have represented between 3 and 16 percent of personal gifts to education during the same time. In 2018, educational institutions reported receiving $3.49 billion in bequests and $474 million in deferred gifts (at present value). These figures reflect only those institutions participating in the 2018 Voluntary Support of Education survey.
CASE Position
Resources
- Repealing the Estate Tax Could Allow Heirs of the Very Wealthy to Avoid Tax on Capital Gains, Tax Policy Center, November 2017
- Estate Tax Schemes: How America's Most Fortunate Hide Their Wealth, Flout Tax Laws, and Grow the Wealth Gap, U.S. Senate Committee on Finance, October 2017
- The Unintended Consequences of Killing the Estate Tax, Tax Policy Center, October 2017
- Ten Facts You Should Know About the Federal Estate Tax, Center on Budget and Policy Priorities, May 2017
- IRS Information on Estate and Gift Taxes, IRS, April 2017
- No, the Estate Tax Isn't a Heavy Burden on Small Businesses, Center on Budget and Policy Priorities, January 2017
- Policy Basics: The Estate Tax, Center on Budget and Policy Priorities, July 2016
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