Reprinted with permission of Tax Analysts.
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Unless Congress changes the law, the federal estate tax
will disappear on January 1, 2010. For the first time since
the 1916 inception of the tax, the estate of anyone dying
in 2010 will go to heirs tax free, a result of the 2001 tax
law that phased out the estate tax over 10 years. But that
law itself expires in 2011 and the estate tax will revert to
The Economic Growth and Tax Relief Reconciliation
Act of 2001 increased the effective estate tax exemption in
steps from $675,000 in 2001 to $3.5 million in 2009 and
reduced the top tax rate from 55 percent to 45 percent.
Raising the exemption cut the share of estates subject to
tax by nearly 90 percent - from 2.14 percent in 2001 to a
projected 0.23 percent in 2009. That percentage is the
lowest since at least 1934 (see figure).
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