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Death Tax

Apr 03, 2015

The U.S. Senate recently approved a budget amendment that supports a repeal of the estate tax. Senators voted 54-46 on the amendment. The amendment aims to repeal the estate tax, sometimes referred to as the “death tax.” Under the tax, an estate’s assets have to be worth more than $5.43 million before they are taxed. Supporters of the bill say the estate tax hits farmers particularly hard, while opponents of the bill say it mostly benefits the wealthiest families and does little for family farms or small business. The approval of the amendment is not binding, but sets the stage for a decision later in the appropriations process.

The House of Representatives is expected to vote next month to repeal the estate tax, following approval of the measure on March 25, 2015, by the Ways and Means Committee. Key provisions of the current law include:

•A permanent exemption of $5 million, indexed for inflation; •A permanent top tax rate of 40 % (with a graduated rate schedule below $1 million above the exemption level); •The enactment of the “stepped-up basis” to reflect the increase in the value of assets; •Permanent spousal transfer of any unused exemption amounts.

Currently, the 2015 Estate Tax parameters are a 40% top tax rate and a $5.43 million exemption.