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Estate Tax Bill Clears House, Fails in Senate Before New Year Begins

January 6, 2010


Estate Tax Bill Clears House, Fails in Senate Before New Year Begins

The House of Representatives passed the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Bill of 2009 (HR 4154) by a vote of 225-to-200 on December 3, 2009. The legislation would have permanently extended the current exemption for estates up to $3.5 million per individual and $7 million for married couples and set a maximum rate of 45 percent on estates above this threshold. In addition, the measure would repeal the enactment of carryover basis rules that would require many heirs to pay additional taxes on built-in gains of property inherited starting in 2010.

The tax rate was not indexed for inflation and could affect more families each year. Based on historical inflation data, the value of the estate tax exemption could be cut in half with every passing generation.

The Senate failed to pass any estate tax measures, thereby allowing for permanent repeal of estate taxes for 2010 only. The Senate is expected to take up a tax package quickly upon return in January.

Congress is expected to pass an extension of 2009 rates for one year retroactive from January 1, 2010, prior to a bigger tax reform package being debated with additional changes to the estate tax.

NMPF will continue to support the highest exemption levels possible while maintaining the stepped-up basis. It is essential that Congress additionally deal with the unique problems that farmers and forest owners face with generational family transition.