American Taxpayers Relief Act.
FINALLY! The first temporary rules were passed by Congress in 2001. Twelve years later and two major tax changes in between, it appears we FINALLY have permanent estate tax rules. Software companies, estate lawyers and financial planners should all be breathing easier after Congress passed the American Taxpayers Relief Act.
Here’s a brief summary of the federal estate tax laws included in the Act. The only change from the current federal estate tax rules that went into effect in 2011 is an increase in the tax rate.
1. The federal estate tax exemption allowance stays at $5 million.
2. Portability stays. Portability gives married couples the ability to exempt $10 million of assets from any federal estate taxes by filing a Deceased Spouse Unused Exemption Allowance form when the first spouse dies.
3. The estate tax rate on estates exceeding the $5 million estate tax exemption allowance will be 40%, a change from the current 35% tax rate.