S. 587 — Death Tax Repeal Act of 2025

This section repeals the federal estate tax for estates of decedents dying on or after the date of enactment and the generation-skipping transfer tax (GSTT) for transfers occurring on or after such date. It further modifies the tax treatment under IRC §2056A of certain distributions from qualified domestic trusts (QDOTs) for decedents dying before enactment by eliminating tax on such distributions made after the 10-year period beginning on the date of enactment or on or after the date of enactment.

This section revises gift tax rules by (1) replacing the rate schedule in section 2502(a)(2) for computing tentative tax on cumulative taxable gifts with a new progressive schedule (18% on amounts up to $10,000; 20% on $10,001–$20,000; 22% on $20,001–$40,000; 24% on $40,001–$60,000; 26% on $60,001–$80,000; 28% on $80,001–$100,000; 30% on $100,001–$150,000; 32% on $150,001–$250,000; 34% on $250,001–$500,000; and 35% over $500,000), (2) providing that transfers in trust are taxable gifts under section 2503 unless the trust is wholly owned by the donor or donor's spouse as a grantor trust under sections 671–679, and (3) setting the lifetime gift tax credit in section 2505(a)(1) to the tentative tax on $10 million (inflation-adjusted after 2011 using the cost-of-living adjustment under section 1(f)(3) with a 2010 base year and rounded to the nearest $10,000; from the current applicable exclusion amount of $5 million indexed from 2011, equivalent to $13.61 million in calendar year 2024), with conforming amendments striking "unified" references. The changes apply to gifts made on or after enactment. For the enactment year, that year is treated as two separate calendar years (one ending the day before enactment and one beginning on the enactment date) for purposes of sections 1015(d), 2502, 2504(b), and 2505. (Thus, pre-enactment gifts use prior law rates and exemption, while post-enactment gifts use the new rules.)