FACT CHECK: Does The Death Tax Only Apply To Estates Worth More Than $11 Million?

David Sivak | Fact Check Editor

Democratic Senator Ron Wyden of Oregon claimed on Twitter that the estate tax applies only to estates worth more than $11 million while fact-checking President Donald Trump’s tax reform speech Wednesday.

Verdict: False

The estate tax applies to gross estates worth more than $5.5 million.

Fact Check:

The estate tax, known colloquially as the death tax, imposes a tax on the value of real estate, stocks, bonds and other assets that the wealthy pass on to heirs when they die. The federal government shields $5.5 million of an estate’s value from taxation in the form of a tax credit, but the remaining amount is subject to a 40 percent tax rate.

Wyden claimed the tax only applies to estates worth more than $11 million because the tax credit is “portable” for married couples; when the first spouse dies, the widow can inherit the estate and the deceased spouse’s credit, effectively doubling the tax shield to $11 million. But unmarried couples and single estate owners don’t benefit from this portability, a point Wyden fails to mention.

Even a married couple that owns an estate worth less than $11 million could still be subject to the estate tax. If the couple hands down some of their assets over the years, they can also apply the tax credit towards what’s known as the gift tax.

This decision would shield them in the short term, but raise their estate tax liability once they pass away. For example, if a married couple uses the entire $11 million tax credit to shield themselves from the gift tax, their full estate could be taxed when they pass away, even if it’s only worth $10 million.

Wyden does not consider this scenario or the possibility that an estate owner is unmarried. We rate his claim as false.

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David Sivak

Fact Check Editor
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