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Tuesday, January 26, 2010

CRS Issue Statement on Estate and Gift Tax

Nonna A. Noto, Coordinator
Specialist in Public Finance

Jane G. Gravelle
Senior Specialist in Economic Policy

Steven Maguire
Specialist in Public Finance

Donald J. Marples
Specialist in Public Finance

John R. Luckey
Legislative Attorney

Jennifer Teefy
Information Research Specialist

Under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16), the estate tax is repealed for decedents dying in 2010. The gift tax, associated with the estate tax, is scheduled to remain in place in 2010, with a cumulative lifetime exclusion of $1 million (above and beyond the annual gift exclusion of $13,000 per donor per recipient) and a maximum tax rate of 35%. Also for 2010 only, the method used to determine the "basis" of all capital assets transferred at death is a modified carryover basis, instead of a step-up in basis.

The estate tax repeal is scheduled to sunset, or expire, on December 31, 2010. If Congress does not change the law beforehand, on January 1, 2011, estate and gift tax law will return to what it would have been had EGTRRA never been enacted. The unified estate and gift tax would be reinstated with a combined exclusion of $1 million. The maximum tax rate would revert to 55% (plus a 5% surtax on taxable estate value from $10 million to $17 million).

Date of Report: January 13, 2010
Number of Pages: 4
Order Number: IS40294
Price: $7.95

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