As we’ve discussed previously, right now there is no estate tax. As a result of a prior tax deal, the estate tax was phased out as of January 1, 2010 and is scheduled to return on January 1, 2011 with an exemption amount of $1 million per individual and a top tax rate of 55%. Most folks assume, however, that the estate tax will be reintroduced in some form before then, with different exemption amounts and rates.
President Obama released his budget earlier this week and, no surprise here, he seeks to reinstate the estate tax at 2009 levels. This would mean individual exemption amounts of $3.5 million and a top rate of 45%. Yesterday, CNN reported that the Senate is considering a different, and more generous proposal, which would grant exemption amounts of $5 million per individual and a top rate of 35%. Both Treasury Secretary Timothy Geithner and Senate Finance Committee Chairman Max Baucus indicated yesterday that they support making the estate tax, in whatever form it finally materializes, retroactive to January 1, 2010. (thanks to TaxProf Blog for linking to the Geithner and Baucus statements). We will keep you updated as the debate continues.
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