The "Death Tax" Lives

To paraphrase Mark Twain, reports of the death of the federal estate tax are greatly exaggerated.

A funny thing happened on the way to the funeral for the federal estate tax. In December, Congress announced its own Christmas miracle: The tax didn’t really expire December 31, 2009, as everyone thought it had. Instead, the lawmakers retroactively revived the tax to cover all deaths in 2010. But get this. The lawmakers also performed a stutter-step move worthy of a great wide receiver: Any 2010 estate that’s better off ignoring the tax can do just that.

A little background is needed to explain this strange turn of events. You’ll recall that part of the 2001 Bush tax cuts was to gradually reduce the bite of the estate tax, kill it all together for 2010, and then allow it to come back with a vengeance in 2011. The plan was to reinstate the estate tax with the $1 million exemption level and 55% tax rate that was in effect in 2000.

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Kevin McCormally
Chief Content Officer, Kiplinger Washington Editors
McCormally retired in 2018 after more than 40 years at Kiplinger. He joined Kiplinger in 1977 as a reporter specializing in taxes, retirement, credit and other personal finance issues. He is the author and editor of many books, helped develop and improve popular tax-preparation software programs, and has written and appeared in several educational videos. In 2005, he was named Editorial Director of The Kiplinger Washington Editors, responsible for overseeing all of our publications and Web site. At the time, Editor in Chief Knight Kiplinger called McCormally "the watchdog of editorial quality, integrity and fairness in all that we do." In 2015, Kevin was named Chief Content Officer and Senior Vice President.