ASA Supports the Permanent Repeal of the Estate Tax!

ASA, along with the Family Business Estate Tax Coalition (FBETC), submitted comments regarding the estate tax as part of the Ways and Means Committee’s Tax Teams information gathering process. ASA has supported the full and permanent repeal of the estate tax. Absent full and permanent repeal, the ASA has supported the temporary increase of estate tax exemption thresholds indexed for inflation, permanent lower tax rates, and provisions for spousal transfer and stepped-up basis. Additionally, ASA supported the temporary estate tax relief in the Tax Cuts and Jobs Act (TCJA), which doubled the exemption to approximately $11 million for tax year 2018 and indexed future increases for inflation through 2025 (currently $13.6 in 2024).

As the Committee considers options for extending or making permanent expiring provisions of the Tax Cuts and Jobs Act in 2025, we offered the following comments:

1. Maintain Stepped-Up Basis: Stepped-up basis is critically important to family-owned businesses because it can significantly reduce the potential estate tax burden that may arise when the family passes on the property to the next generation.  When a property owner passes away, the basis (or original purchase price) of the property is "stepped up" to the current market value at the time of their death, rather than being based on the original purchase price. This is beneficial because if heirs must sell the property, they only pay capital gains tax on the difference between the sale price and the stepped-up value, not on the difference between the original purchase price and the sale price.
2. Estate Tax Relief: The estate tax is overly burdensome on families trying to pass their business to the next generation. While we believe it should be repealed in its entirety, we all share concern that any reduction to the current enhanced exemption level will be detrimental for families looking to pass their businesses, farms and ranches to the next generation. The higher exemption threshold alleviates the tax burden that often forces the selling of all or parts of family-owned businesses to pay the tax bill. At a minimum, keeping the current enhanced exemption level will ensure continuity of operations and preserve the family-owned businesses that are vital to our communities.