Death by Deduction: Section 2058 and the Decline of State Death Taxes

48 ACTEC Law Journal (2023 Forthcoming)

60 Pages Posted: 8 Apr 2022

See all articles by Jeffrey A. Cooper

Jeffrey A. Cooper

Quinnipiac University School of Law

Date Written: April 4, 2022


This article illustrates how, and seeks to explain why, the deduction for state estate taxes (Internal Revenue Code Section 2058) seems to have had no meaningful effect on state tax policy.

Since the deduction for state estate taxes reduces the amount of federal estate taxes paid, the net effect is to shift to the federal government some of the cost of these state death taxes. Prevailing theories of tax policy suggest that state governments will structure their tax systems to maximize this type of available deduction. But theory has not borne out in practice. To the contrary, most states have responded to enactment of Section 2058 not by restructuring their existing state estate taxes to maximize this federal deduction but rather by entirely abandoning state estate taxes. While a remaining group continue to impose those taxes, they have failed to structure those taxes in a manner that would optimize the deduction. In short, the 2058 deduction seems to have had extremely little, or perhaps entirely no, effect on state estate tax policy.

This article explores state responses to Section 2058, yielding important lessons about the operation of state legislatures, the political climate surrounding progressive taxation, and the interplay of federal and state taxes.

Keywords: tax, estate tax, inheritance tax, death tax, internal revenue code, section 2058, fiscal federalism, state death tax deduction, EGTRRA, tax credit, tax deduction

Suggested Citation

Cooper, Jeffrey A., Death by Deduction: Section 2058 and the Decline of State Death Taxes (April 4, 2022). 48 ACTEC Law Journal (2023 Forthcoming), Available at SSRN: or

Jeffrey A. Cooper (Contact Author)

Quinnipiac University School of Law ( email )

275 Mt. Carmel Ave.
Hamden, CT 06518
United States
203-582-3731 (Phone)

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