FAQs on the Death of the Estate Tax

If Congress continues to do nothing about the federal estate tax, the levy will be back with a vengeance in 2011.

Congress missed the deadline when it came to dealing with the federal estate tax. Despite more than eight years' notice, lawmakers allowed the estate tax to die on December 31. That levy -- which claimed 45% of the amount of an estate exceeding $3.5 million in 2009 -- has disappeared in a triumph for opponents who have long condemned the "death tax."

Although that might sound like cause for celebration, contain yourself. If Congress continues to do nothing, the estate tax will come back to life with a vengeance in 2011. As the law now stands, in 2011, just $1 million will pass to heirs tax-free, and bigger estates will be taxed at a top rate of 60%. What's more, a complicated new tax rule came into play on January 1 that requires some heirs to pay tax on profit from inherited assets that have long been tax-free.

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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.