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Wednesday, January 13, 2010

State Estate and Gift Tax Revenue

Steven Maguire
Specialist in Public Finance

P.L. 107-16, the Economic Growth and Tax Relief Reconciliation Act of 2001, repeals the federal estate tax for 2010 decedents. In addition, the act repealed the credit for state estate taxes for individuals dying after December 31, 2004, and replaced the credit with a deduction. In most states, the repeal of the tax and the significant increase in the federal exclusion will also repeal or diminish state estate, inheritance, and gift taxes. Some state budgets depend on the estate tax more than others. As a percentage of total tax revenue collected from FY2001 to FY2004, state estate tax contributions ranged from 0.19% in Alaska to 3.15% in Pennsylvania. After the federal credit for state estate taxes changed to a deduction in 2005, revenue collected from this tax source declined significantly, and in 2010, 29 states no longer levied estate or inheritance taxes. In the 111th Congress, H.R. 4154, passed by the House of Representatives on December 3, 2009, would permanently set the estate tax exemption level at $3.5 million per decedent, and proposals currently under consideration in the Senate would similarly retain the estate tax after repeal in 2010. This report will be updated as events warrant.

Date of Report: January 1, 2010
Number of Pages: 8
Order Number: RS20853
Price: $29.95

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