Last week, The U.S. House of Representatives passed legislation that would make permanent the current estate tax rate of 45 percent with exemption levels of $3.5 million for individuals and $7 million for couples.
Under the Bush administration, Congress temporarily reduced the estate tax. The tax is scheduled to be eliminated in 2010, but return to the maximum rate of 55 percent with an exemption of only $1 million.
The House action is preferable to the status quo; however we are still working to enact Senate legislation that would provide a 35 percent rate and a $5 million exemption ($10 million for couples). This legislation would also have the exemption indexed to inflation.
While we do not expect any action before the end of the year, it is vital that an estate tax revision is enacted before the end of next year.
We will keep you posted as these bills move forward.