Estate Tax Provisions Included in Fiscal Cliff Agreement

January 1, 2013 04:30 PM
 

via a special arrangement with Informa Economics, Inc.

Provisions estimated to reduce revenue by $369.1 billion over 10 years


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


The fiscal cliff agreement permanently extends the current exemption amount from the estate tax, exempting estates up to $5.12 million ($5 million indexed for inflation for years after 2011). But it increases the maximum rate to 40% — an increase from the current 35% rate — for estate values above the exemption amount. Without action, the estate tax would revert to pre-2001 levels of a 55% top rate and just $1 million in estate value being exempt from the tax.

The 2010 tax law, which set the current rate and exemption level, also reunified the gift tax with the estate tax. Therefore, the measure also extends gift tax levels of a $5.12 million ($5 million indexed for inflation) exemption and a 40% top rate. In addition, it extends portability rules related to the passing of an exemption amount onto a surviving spouse.

The Joint Committee on Taxation estimates that these provisions would reduce revenues by $369.1 billion over 10 years — nearly 10% the total revenue cost of the measure.


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 


 

 

 

 

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