As a result of legislation passed some years ago – the estate tax, also known as the “death tax” – has been repealed for 2010.  However, if Congress does not act, this onerous tax will come back in full force to pre-2001 levels in 2011, and back to its original notoriety as one of the steepest tax rates.  If action is not taken to make the repeal permanent – or at least reduce the estate tax rate – then next year those estates worth more than $1 million will be taxed at an exorbitant rate of 55 percent.  The U.S. Senate is working on a deal that would make rates set in 2009 permanent – taxing estates worth over $3.5 million at a 45 percent rate.

While many in Congress recognize the pressing need to pass legislation addressing this issue, there is some debate on whether this can be passed as a stand-alone bill or whether it should be incorporated as part of a larger measure.  At the moment, some in Congress are eyeing the jobs package bill as a possible vehicle for the estate tax legislation.  But legislation recently passed by the House, HR 4154, could be considered in the Senate as well.  This bill would make permanent the 2009 estate tax rules – although many Republicans would prefer a lower rate than those 2009 levels as well as a higher exemption levels.

AWMA has consistently supported a permanent repeal of the so-called “death tax” and will continue to press for enactment of legislation to accomplish this goal.