Chicago Automobile Trade Association

Estate tax phaseout underway-till 2011

November 23, 2010

The exemption threshold from the federal estate tax, effective Jan. 1, 2002, is $1 million, a level that removes the tax burden from more than 50 percent of those whose estates formerly would be subject to the tax.

The exemption threshold rises gradually to $3.5 million by 2009, then the tax is eliminated in 2010. However, as the 2001 law is written, the estate tax will be reinstated in 2011, when estates valued at more than $1 million will again be subject to the hefty tax.

The provision was written to keep the bill within budget limits. That means if a wealthy parent dies in 2010, her children can inherit an unlimited amount tax-free, but if she dies in 2011, they'll be taxed.



Copyright © 2010 Chicago Automobile Trade Association. All Rights Reserved.