Estate Tax Update

From Toolkit for Giving: What to Give

On June 7, 2001, President Bush signed a tax cut bill that includes a gradual, temporary repeal of the estate tax. Key estate tax provisions in the bill include:

  • Top 55 percent tax rate drops to 50 percent in 2002 and surtax on estates over $10 million eliminated.
  • Top estate tax rate drops to 49 percent in 2002, 48 percent in 2004, 47 percent in 2005, 46 percent in 2006 and 45 percent from 2007 until repeal.
  • Individual exempted amount rises from $675,000 now to $1 million in 2002. Rises to $1.5 million in 2004, $2 million in 2006 and $3.5 million in 2009.
  • Tax remains in place from 2001 through 2009 and is repealed as of Jan. 1, 2010. New capital gains rules take effect.
  • Congressional budget sunset rules mean entire tax bill expires on Dec. 31, 2010 unless extended by future Congress. Estate tax would return on Jan. 1, 2011.

The impact of these estate tax changes on a person's charitable giving decisions are complex and will vary for each individual. It is important that you consult a tax advisor to discuss your specific situation.