Under current law for 2023, the first $12.92 million ($25.84 million for married couples) of an estate is exempt from taxation, while the remainder is taxed at a 40 percent rate. The exemption level is indexed to inflation but is set to drop down to an estimated $6.2 million ($12.4 million for married couples) when the individual provisions enacted in the 2017 Tax Cuts and Jobs Act expire at the end of 2025.

House Republicans have introduced legislation, the TCJA Permanency Act (H.R. 976), that would make all of the expiring provisions in the TCJA, including the increased estate tax exemption, permanent. Congressional Republicans have also introduced legislation in both chambers (S. 1108, H.R. 338) that would permanently repeal the estate tax.

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 6-12 percent per year and reduce bequests by 16-28 percent. Research also suggests that increasing the exemption rate or lowering the tax rate leads to declines in charitable giving, but not as severe of a decline as a full repeal of the tax.

When the estate was temporarily repealed in 2010, gross charitable bequests in Internal Revenue Service tax filings declined by $4.4 billion, or 37 percent. When the tax returned in 2011, bequests nearly doubled to $14.3 billion, up from $7.49 billion. 

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.

Resources

• IRS Information on Estate and Gift Taxes, IRS, June 2023
• Policy Basics: The Estate Tax, Center on Budget and Policy Priorities, November 2018
• Repealing the Estate Tax Would Plunge Charitable Giving, Center for American Progress, November 2017
• Why Nonprofits Should Weigh In on Proposals to Repeal Estate Tax, Nonprofit Quarterly, October 2017

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