The federal estate tax is a burden on family businesses. Not only does the tax threaten to close HVACR family businesses, it also takes capital away from the business to pay for the expensive estate planning. ACCA has been lobbying to reel in this tax, and wanted to share where things stand after our analysis of the House and Senate tax reform bills so contractors know what this means for their businesses.
The House of Representatives passed a tax reform bill that would kill the death tax starting in 2023. Until then, the House bill will increase the federal death tax exemption in 2018 for single individuals from $5.6m to $11.2m and for married couples from $11.2m to $22.4m. The doubling of the current federal estate tax exemptions will be a major help for those small business owners who have a larger estate than the current exemption amounts.
The Senate proposal, which is still being debated (as of Nov. 29), does NOT repeal the death tax. The Senate tax reform effort would double the exemption from current law, just like the House legislation. However, those changes would sunset in 2025 and the exemptions would revert to an indexed $5 million amount after December 31, 2025.
Moving forward, the permanent repeal of the death tax in the H.R. 1 offers Senate Republicans a strong position in negotiations. Unfortunately, while the current Senate mark doubles the exemptions for individuals and families, it stops short of repealing the tax. ACCA is working with Senate leadership, and the Senate Finance Committee to ensure a full repeal of the estate tax repeal, as well as several other tax priorities critical to ACCA’s members bottom-line.