The history of estate taxes in America has been a long and winding road. Careful estate planning is still one of the most important ways to manage and protect your assets for your heirs.
The Stamp Act of 1797 was the first federal estate tax in the United States and was passed to help fund an undeclared war with France; it was repealed in 1802. The Revenue Act of 1862 reinstated the estate tax in order to fund the Civil War; it was abolished in 1870. To finance the Spanish American War, the War Revenue Act of 1898 was passed, and subsequently abolished in 1902. Due to the costs of World War I, the Revenue Act of 1916 reinstated an estate tax that, in some form or other, has been in effect ever since.
The Economic Growth and Tax Relief Reconciliation Act of 2001 gradually increased the federal estate tax exclusion, until finally repealing the federal estate tax altogether for the 2010 tax year only. The Tax Relief Act of 2010 reinstated the federal estate tax with a $5 million exclusion, indexing the exclusion for inflation after 2011. The provisions of the Tax Relief Act of 2010 expired on December 31, 2012.
The American Taxpayer Relief Act of 2012 increased the federal estate tax rate from 35% to 40%, but left in place the higher exclusion level, which reached $5.49 million in 2017; both provisions are now permanent. It also left in place the “portability” of any unused exclusion between spouses.
The latest major piece of tax legislation is the Tax Cuts and Jobs Act, which was signed into law on December 22, 2017. This Act doubled the federal estate tax exclusion to $11.18 million in 2018 (indexed annually for inflation) while retaining the 40% tax rate. The 2025 federal estate tax exclusion is $13.99 million (up from $13.61 million in 2024). In 2026, the exclusion is scheduled to revert to its pre-2018 level.
The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2025 Broadridge Financial Solutions, Inc.