How the Death Tax Repeal Act of 2025 Could Impact Your Estate Planning

Have you spent your life building something meaningful, only to wonder if a large part of it might be taken before it ever reaches the people you love? That’s exactly the concern many American families—including families here in Hawaii—face when thinking about the federal estate tax, often called the “death tax.”

Now, a new bill gaining attention in Congress—the Death Tax Repeal Act of 2025 (DTRA)—could transform the way wealth is passed down from generation to generation. But what would this change really mean for you and your loved ones in Honolulu or throughout Hawaii?

Estate Taxes: An Old Debate with New Urgency

The estate tax has been part of American law for more than a century, yet it remains one of the most debated pieces of our tax system. Under current law, estates valued over a certain threshold are subject to federal tax before assets can be passed to heirs.

To put it in perspective: imagine spending decades carefully tending a garden, only to have a significant share of it claimed by someone else just before you can hand it to your children. For many families, that’s what the estate tax feels like—an added hardship during an already emotional time.

Supporters of the DTRA argue that this form of double taxation—first when the assets were earned, and again at death—is fundamentally unfair. They believe eliminating the estate tax would protect family legacies and honor the hard work it took to build them.

However, like any major shift, the potential repeal brings both opportunities and new challenges that deserve thoughtful consideration.

Understanding the Potential Impact

Historically, estate tax rates have varied widely. When first introduced in 1916, the rate was just 10%. During the mid-20th century, it climbed as high as 77%. Today, the federal estate tax rate is 40% on assets exceeding $13.61 million (in 2024 figures).

Without action from Congress, that exemption amount is set to decrease by roughly half in 2026, dropping closer to $6–7 million per person (adjusted for inflation), with the same 40% rate applying.

For many families in Honolulu and across Hawaii, these exemption thresholds may seem high—but with soaring property values, small business ownership, and rising asset prices, estates can reach taxable levels faster than many realize.

For families who own businesses, real estate, or other valuable but illiquid assets, the repeal could offer much-needed relief. With high property values and strong family ties to land and businesses here in Hawaii, heirs are often forced to sell portions of treasured assets just to pay the tax bill. Eliminating the estate tax could help preserve these legacies for future generations.

On the other hand, critics raise important concerns. The estate tax contributes to federal revenue that funds public services like education, infrastructure, and health programs. If eliminated, those dollars would need to be replaced—potentially shifting more tax burden onto middle- and working-class families.

Some economists also warn that repealing the estate tax could further concentrate wealth among a small number of families, deepening economic inequality over time.

As you think about your own planning, it’s worth reflecting: Are you more concerned about maximizing what you leave behind, or about maintaining broader societal opportunities for future generations? There’s no single right answer—but it’s important to ask.

How Estate Planning Could Shift if the DTRA Becomes Law

If the Death Tax Repeal Act of 2025 becomes reality, it could significantly reshape estate planning strategies, particularly for families with larger estates. Here’s what could change:

• Simplified Strategies for High-Value Estates: Those with estates above the current exemption threshold might no longer need to rely on complex tax-minimization strategies like certain irrevocable trusts, family limited partnerships, or insurance structures.

• A New Focus on Income and Capital Gains Taxes: Attention would likely pivot to optimizing basis step-ups and reducing future income taxes for heirs, rather than minimizing estate taxes.

• Charitable Giving May Shift: Many families currently include charitable giving partly to reduce estate taxes. Without that incentive, philanthropic choices may become driven more by personal values than by tax benefits.

In short, if your estate is near or above today’s exemption amounts—or if you expect it could be someday—it’s wise to plan proactively. A thoughtful strategy today can give you flexibility, no matter what Congress ultimately decides.

Planning for the Future with Confidence, Not Fear

One thing is certain: tax laws can change quickly, and often in unexpected ways. Proposals like the DTRA often undergo major revisions before they pass—if they pass at all.

Here in Hawaii, where real estate and family businesses hold significant value, it’s even more important to ensure your estate plan is flexible and forward-looking.

So what’s the best move?

• Review Your Estate Plan: Make sure it’s built for flexibility and still meets your long-term goals.

• Model Different Scenarios: When you work with me, we’ll explore “what if” possibilities to ensure your plan can adapt to various tax landscapes.

• Focus on Your True Legacy: Beyond taxes and documents, think about the memories, values, and guidance you want to leave behind.

• Communicate Your Vision: Talk openly with loved ones about your wishes and how you want your legacy to be carried forward.

At my firm, we take estate planning a step further. Through my Life & Legacy Planning Process, we don’t just create documents—we build living plans that evolve alongside your life, your assets, and the law itself. We schedule regular reviews and proactively update your plan, ensuring that it will work exactly when your loved ones need it most.

Instead of a plan that gathers dust in a drawer, you’ll have a dynamic strategy—and a trusted advisor—walking alongside you through the seasons of life.

Your Next Step: Secure the Future You Envision

No matter what happens with the Death Tax Repeal Act, your loved ones deserve the peace of mind that comes from knowing your affairs are in order.

If you’re in Honolulu or anywhere across Hawaii, let’s work together to ensure your loved ones are fully protected—no matter what the future holds.

When you work with me, we’ll begin with a Life & Legacy Planning Session, where you’ll get more financially organized than ever before. Together, we’ll craft a personalized plan that reflects your values, protects your loved ones, and prepares them for life’s uncertainties—tax law changes included.

Frequently Asked Questions

Q: What is the Death Tax Repeal Act of 2025?

A: The Death Tax Repeal Act of 2025 is proposed legislation that would eliminate the federal estate tax, often referred to as the "death tax." If passed, it could significantly change how wealth is transferred across generations in the United States.

Q: Will the Death Tax Repeal Act affect everyone?

A: No. Currently, the estate tax only impacts individuals with estates valued over approximately $13.61 million (or $27.22 million for married couples) in 2024. However, changes in tax law can have ripple effects that impact estate planning strategies for families of all wealth levels.

Q: Should I still create an estate plan if the estate tax is repealed?

A: Absolutely. A comprehensive estate plan does far more than address taxes—it protects your loved ones, preserves your legacy, avoids court involvement, and ensures your wishes are honored. Regardless of tax laws, having a thoughtful plan in place is essential.

Q: How can I make sure my estate plan adapts to future changes?

A: By working with a lawyer who offers ongoing support and regular updates. Through my Life & Legacy Planning Process, I help clients in Honolulu and throughout Hawaii keep their plans current with life changes, asset shifts, and tax law updates.

Ready to take the next step? Let’s connect and start building a plan that honors everything you’ve worked so hard to create.

This article is brought to you by the Law Office of Keoni Souza, a boutique estate planning firm located in Honolulu, Hawaiʻi, proudly serving families on Oʻahu and across the Hawaiian Islands. At our firm, estate planning is about more than documents—it’s about creating lasting peace of mind for you and the people you love. Through our unique Life & Legacy Planning Process, we guide you to make informed, empowered decisions that protect your wealth, your wishes, and your family’s future. To get started, contact our Honolulu office today to schedule your Family Wealth Planning Session. Mention this article to learn how you can receive this $750 session at no charge.

Disclaimer: The information on this website is for informational purposes only and should not be considered legal advice. For guidance tailored to your specific situation, please consult an estate planning attorney licensed in the State of Hawaiʻi. Use of this website or communication through this site does not create an attorney-client relationship with the Law Office of Keoni Souza, LLC.