Given the delays in passing healthcare reform, the Senate did not act on estate taxes at the end of 2009. As a result, the estate tax and GSTT were repealed on January 1, 2010. The gift tax is retained with a 35% rate, and there is a step up in basis for estate assets of $1.3 million. Spouses will be able to benefit from an added step up in basis on assets valued at $3,000,000. Other assets will not receive a step up in basis.
However, because both Senate Finance Committee Chair Max Baucus (D-MT) and Budget Committee Chair Kent Conrad (D-ND) favor an extension of the $3.5 million exemption and 45% estate tax rate, Congress may take action on estate taxes in 2010.
| Year | Gift Exemption | Estate Exemption | Top Rate |
|---|---|---|---|
| 2009 | $100,000,000 | $3,500,000 | 45% |
| 2010 | $1,000,000 | Repealed | 35% |
| 2011 | $1,000,000 | $1,000,000 | 55% |
| Notes: The lifetime gift tax exemption is frozen at $1 million. The annual exclusion in 2010 is $13,000. | |||
| Rate | Joint | Single |
|---|---|---|
| 10% | 0-$16,750 | 0-$8,375 |
| 15% | $16,751-68,000 | $8,376-34,000 |
| 25% | $68,001-137,300 | $34,001-82,400 |
| 28% | $137,301-209,250 | $82,401-171,850 |
| 33% | $209,251-373,650 | $171,851-373,650 |
| 35% | $373,651 + | $373,651 + |
| Notes: $3,650 is the annual personal exemption. The standard deductable for couples is $11,400 and for an individual is $5,700. | ||
