As Congress returns for the lame-duck session, inquiring estate planning professionals and U.S. citizens want to know: will Congress address the estate tax mess this year? The next few weeks will be the last opportunity Democrats have to enact legislation as the controlling party in the House and Senate. Come January, the Republicans will regain control of the House and they have picked up six Senate seats.
If Congress does not act, taxpayers can only protect $1 million from estate tax in 2011. In 2009, the exemption amount had been $3.5 million and some legislators, mostly Republicans, believe that the exemption amount should be even higher. For 2010 only, there is no estate tax. It is increasingly likely that Congress will not retroactively impose an estate tax this year.
So will next year bring a $1 million exemption amount? It is difficult to predict whether Congress will even address the issue this session. What is upper most on Congress’ mind are the expiring Bush income tax cuts. If current law expires, the wealthiest taxpayers would pay tax at rates approaching 40%, and capital gain rates would increase from 15% to 20%. It would affect families earning $250,000 or more. If Congress focuses on only the income and capital gain rates, the estate tax exemption will at least start 2011 at $1 million.
Comments