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Estate taxes |
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Estate taxes are levied on the beneficiaries, or heirs, of an estate. For 2005, the amount of income that is excluded from estate taxes is $1.5 million. The maximum estate and gift tax rate is 48%. The exclusion rises to $2 million in 2006 and $3.5 million in 2009. The maximum estate and gift tax rate is reduced by 1 percentage point in each of the next two years to 45% in 2007. The 2001 tax law eliminates the estate tax in 2010. The maximum gift tax rate in 2010 will be 35%. |
| For Decedents Dying In |
Maximum Estate Tax Rate |
Applicable Exclusion Amount |
Exemption Equivalent |
| 2001 | 55% | $220,550 | $675,000 |
| 2002 | 50% | 345,800 | 1,000,000 |
| 2003 | 49% | 345,800 | 1,000,000 |
| 2004 | 48% | 555,800 | 1,500,000 |
| 2005 | 47% | 555,800 | 1,500,000 |
| 2006 | 46% | 780,800 | 2,000,000 |
| 2007 | 45% | 780,800 | 2,000,000 |
| 2008 | 45% | 780,800 | 2,000,000 |
| 2009 | 45% | 1,455,800 | 3,500,000 |
| 2010 | "Repealed" | N/A | N/A |
| 2011 | 55% Reintroduced | 345,800 | 1,000,000 |
About the "Repeal": The Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA 2001), was signed into law by President Bush
on June 7, 2001; it "repeals" the estate tax for one year in 2010.
Given the "sunset provisions" as required under the Byrd Rule, the
2001 federal estate tax rules will be reinstated in 2011, but with just a $1
million exemption equivalent (as originally scheduled under TRA 1997). Some of
the more cynical planners have called this new tax law the "Assisted
Suicide Act of 2010" when referring to the single year's true tax relief,
although during 2010 the assets inherited lose their "step-up" at
death for many families. Consult with your tax and legal advisors to best plan
for ways to minimize unnecessary tax and uncertainty.
| From | To | Base Rate Plus | Tax on the Excess of |
| $ 0 | $ 10,000 | 18% | $ 0 |
| 10,000 | 20,000 | $ 1,800 + 20% | 10,000 |
| 20,000 | 40,000 | 3,800 + 22% | 20,000 |
| 40,000 | 60,000 | 8,200 + 24% | 40,000 |
| 60,000 | 80,000 | 13,000 + 26% | 60,000 |
| 80,000 | 100,000 | 18,200 + 28% | 80,000 |
| 100,000 | 150,000 | 23,800 + 30% | 100,000 |
| 150,000 | 250,000 | 38,800 + 32% | 150,000 |
| 250,000 | 500,000 | 70,800 + 34% | 250,000 |
| 500,000 | 750,000 | 155,800 + 37% | 500,000 |
| 750,000 | 1,000,000 | 248,300 + 39% | 750,000 |
| 1,000,000 | 1,250,000 | 345,800 + 41% | 1,000,000 |
| 1,250,000 | 1,500,000 | 448,300 + 43% | 1,250,000 |
| 1,500,000 | 2,000,000 | 555,800 + 45% | 1,500,000 |
| 2,000,000 | 2,500,000 | 780,800 + 49% | 2,000,000 |
| 2,500,000 | 3,000,000 | 1,025,800 + 53% | 2,500,000 |
| 3,000,000 | 10,000,000 | 1,290,800 + 55% | 3,000,000 |
| 10,000,000 | 17,184,000 | 5,140,800 + 60% | 10,000,000 |
| 17,184,000 | On up | 9,451,200 + 55% | 17,184,000 |