TPC Tax Topics | Estate and Gift Taxes

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Estate and Gift Taxes

Estates larger than $3.5 million potentially owe estate tax in 2009. Only about 1 in 400 deaths result in a taxable estate; 99.75 percent of deaths trigger no estate tax. The estate tax will raise almost $15 billion from 6,100 estates in 2009.
Source: Tax Policy Center Table T09-0200
Under the 2001 tax cut, the estate tax phases out gradually to complete repeal in 2010. In 2011, the estate tax reverts to its 2001 status with estates greater than $1 million subject to tax rates up to 60 percent.
Source: The Estate Tax Is Down, But Not Out
The estate tax is the most progressive federal tax. In 2009, more than 90 percent of estate tax revenue will come from the top 5 percent of the income distribution. Taxpayers in the bottom four quintiles face an average effective tax rate of less than 0.05 percent.
Source: Tax Policy Center Table T09-0201
The Obama Administration's FY2010 budget proposes to make 2009 law ($3.5 million exemption and 45 percent rate) permanent and index the exemption value for inflation. An alternative Senate proposal would raise the exemption to $5 million and lower the rate to 35 percent. Source : Tax Policy Center Table T09-0200.

For more on the estate tax, see:

Estate Tax Reform: A Third Option, C. Eugene Steuerle, July 18, 2005.

Options to Reform the Estate Tax, Leonard E. Burman, William G. Gale and Jeff Rohaly, March 23, 2005.

Effects of Estate Tax Reform on Charitable Giving, by Jon M. Bakija and William G. Gale, July 10, 2003.

The Estate Tax Is Down, But Not Out, by Leonard E. Burman and William G. Gale, December 1, 2001.

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