This bill would lower the tax rate on estates, gifts, and generation-skipping transfers from whatever the current rates are down to a flat 20 percent. When someone dies and leaves money or property to their heirs, the government currently taxes that transfer at higher rates depending on the amount. This bill simplifies that system by making it one flat 20 percent tax rate instead.

The bill also affects gifts you give during your lifetime and a special tax called the generation-skipping transfer tax, which applies when wealthy people try to skip a generation and pass money directly to grandchildren to avoid taxes. All of these would now be taxed at the same 20 percent rate.

The changes would take effect for anyone who dies, makes large gifts, or triggers generation-skipping transfers after December 31, 2022. This would primarily affect wealthy families and estates, since most people's estates are small enough to avoid these taxes entirely due to exemption thresholds. The bill essentially makes the tax system simpler and potentially less expensive for large estates, though the actual financial impact depends on what the current rates are compared to this new 20 percent rate.

Estate Tax Rate Reduction Act

Arrington, Jodey C.

Estate Tax Rate Reduction ActThis bill reduces the rate for the tax on estates, gifts, and generation-skipping transfers to 20%. (Under current law, the highest rate is 40%.)The bill also exempts the budgetary effects of the tax reduction from the Pay-As-You-Go (PAYGO) rules established by the Statutory Pay-As-You-Go Act of 2010 and the FY2018 congressional budget resolution.&nbsp;