The estate tax was set to expire in December of 2010. Under the bill as written, the expiring estate tax would permanently exempt couples' estates of up to $7 million.
The House voted to extend the estate tax as written. Current tax law imposes a maximum of 4% tax on estates. In 2001, a bill was passed that allowed tax payers a reduction in estate tax. During 2010, there would be no estate tax whatsoever - meaning that those who passed away during 2010 would not have to pay one penny of federal income tax.
Here's the kicker: in 2011 the estate tax was said to come back with a vengeance. For estates over $1 million, the estate tax would bear a top rate of 55%.
Many Americans will not be affected one way or another. The previous estate tax law set to come back in 2011 would exempt estates of up to $1 million. Most people's estates aren't even close to that amount.
Even though the House voted to extend the estate tax, the Senate must vote. As always, the Senate will most likely come up with a version of their own bill that would have to be reconciled with the House Bill. Congress needs to get their house in order by December 31, or else the estate tax automatically vanishes for a year.
If You are scared of estate taxes You aren't alone. There are several ways to avoid having to pay estate taxes. Speak with a competent estate attorney or CPA to discuss options for your particular situation.
Source: MSN Money
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