ExxonMobil Employees: A Brief History of Estate Taxes

In 1898, a federal legacy tax was proposed to raise revenue for the Spanish-American War. This served as a precursor to modern estate taxes. It instituted tax rates that were graduated by the size of the estate. The end of the war came in 1902, and the legacy tax was repealed later that same year.

In 1913, however, the 16th Amendment to the Constitution was ratified – the one that gives Congress the right to “lay and collect taxes on incomes, from whatever source derived.” This amendment paved the way for the Revenue Act of 1916, which established an estate tax that in one way or another, has been part of U.S. history since then.

In 2010, the estate tax expired – briefly. But in December 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The new law retroactively imposed tax legislation on all estates settled in 2010.

In 2012, the American Tax Relief Act made the estate tax a permanent part of the tax code.

As part of the 2017 Tax Cuts and Jobs Act, estate tax rules were adjusted again. The estate tax exemption was raised to $11.2 million, a doubling of the $5.6 million that previously existed. Married couples were able to pass as much as $22.4 million to their heirs. As of 2022, that rate has risen to $12.06 million per individual (and $24.12 million for married couples). The Act is set to expire in 2025. If ExxonMobil employees are uncertain about your estate strategy, it may be a good time to review the approach you currently have in place.

Estate Taxes and Overall Federal Revenues

Estate taxes typically account for about one percent of total federal revenue.

Chart Source: USASpending.gov, 2022

Exemption through the Years

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It's important for ExxonMobil employees to understand that federal estate taxes exempt a share of estates from federal estate taxes. For the 2022 tax year, if an estate is worth less than $12.06 million, no federal estate taxes may apply.

Year	Exclusion Amount	Highest Tax Rate
2002	$1,000,000	50.0%
2003	$1,000,000	49.0%
2004	$1,500,000	48.0%
2005	$1,500,000	47.0%
2006	$2,000,000	46.0%
2007	$2,000,000	45.0%
2008	$2,000,000	45.0%
2009	$3,500,000	45.0%
2010	$0 or $5,000,000	0% or 35%
2011	$5,000,000	35.0%
2012	$5,120,000	35.0%
2013	$5,250,000	39.6%
2014	$5,340,000	39.6%
2015	$5,430,000	39.6%
2016	$5,450,000	39.6%
2017	$5,490,000	39.6%
2018	$11,180,000	37%
2019	$11,400,000	37%
2020	$11,580,000	40%
2021	$11,700,000	40%
2022	$12,060,000	40%