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Congress Approves Estate Tax Repeal At Least for One Year

  • May 29th, 2001

Under the $1.35 trillion tax cut bill passed by Congress, the estate tax will be eliminated in 2010. Until the tax is completely abolished, the size of estates exempt from taxes will rise from the current $675,000 to $1 million in 2002, $1.5 million in 2004, $2 million in 2006 and $3.5 million in 2009. At the same time, the current top estate tax rate of 55 percent would be gradually lowered to 45 percent by 2007.

Although the estate tax is slated to be eliminated in 2010, it is entirely possible that it could return the following year. This is because the new tax cut bill 'sunsets' at the end of 2010. If Congress does nothing between now and then, all the provisions, including the repeal of the estate tax, will revert to current law. The Administration has announced that it will try to speed up provisions of the new tax law, including estate tax repeal, in future tax bills. In other words, the fight over repeal of the estate tax is far from over.

The non-profit group OMB Watch, which has fiercely opposed repeal of the estate tax, is hailing the new estate tax provisions as a victory. 'In effect,' the group says, 'the estate tax has been preserved and [supporters of repeal] have been left with only a symbolic victory.' Nevertheless, OMB Watch estimates that the estate tax changes will cost the government more than $138 billion over the next 10 years. For OMB Watch's analysis of the estate tax provisions, go to ombwatch.org.

Local Elder Law Attorneys in Ashburn, VA

Jean Ball

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA

Mindy Felinton

Felinton Elder Law & Estate Planning Centers
Rockville, MD

Loretta Williams

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA

Last Modified: 05/29/2001

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