The U.S. House of Representatives on Dec. 4 passed the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009 (H.R.4154) that would extend and make permanent the 45% inheritance tax and the current $3.5 million exemption, $7 million for married taxpayers, according to an advisory from the American Horse Council. The act, introduced by Representative Earl Pomeroy (D-ND) in November, would apply to decedents dying after Dec. 31, 2009, the AHC said.
“This is just the first step in what is likely to be a battle into 2010 over the estate tax,” the AHC said in a release. “There is great disagreement over the optimum tax rate, the size of the exemption and whether the rate should be indexed for inflation. Many on both sides of the aisle want a lower rate and a higher exemption, e.g. 35% and $5 million. In addition, the debate on health care is also likely to prevent the Senate from considering this bill this year.”
According to the AHC, under the Economic Growth and Tax Relief Reconciliation Act, which was passed in 2001, the estate tax has been reduced incrementally from 55% to the current 45%. The AHC noted that legislation also raised the amount of an estate that was exempted from the tax from $675,000 to $3.5 million. Under that law, the estate tax is scheduled to go to zero for 2010 and then in 2011 return to the 2001 rates of 55% with an exemption for estates up to $1 million.
“Many in Congress do not want the tax to go to zero, but they also do not want it to go back to the 55% level of 2001,” the AHC noted.
Also, according to the AHC, the House-passed bill would permanently extend the current 45% inheritance tax on estates and retain the current exemption of $3.5 million and would also cancel the 2010 one year repeal of the estate tax.
