Status of Estate Tax in 2010

Estate Planning

By Melanie LaSota

Despite the scheduled January 1, 2010 expiration of the estate tax, it is unlikely Congress will pass an estate tax bill before the end of the year.  Under current law, the estate tax is scheduled to temporarily disappear in 2010 and return in 2011 with higher rates unless action is taken by Congress. 

On December 3, 2009, the House passed a version of an Estate Tax bill which called for a permanent 45% tax rate and $3.5 million estate tax exemption ($7 million for couples), which is basically an extension of the 2009 estate tax law. The Senate, however, is unlikely to act on legislation in the near future because the Democrats are divided over the terms of the extension and most Republicans oppose the tax.   

Most likely, Congress will revise the estate tax legislation in early 2010 and reinstate the estate tax retroactively. No legislation action is likely before 2010 since the House adjourned for the rest of 2009 on December 16th, and Senate has acknowledged that they wouldn’t be have time to fix the estate tax before the end of the year. However, as Majority Leader Steny Hoyer said, House members may be called back for legislative business during the recess “if it becomes necessary.” 

Laura Fernan assisted with the development of this story.

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