According to a report in the NY Times today, the Senate is expected to vote as early as tomorrow, June 8, 2006, regarding the permanent repeal of the estate tax or, in the alternative, to increase the estate tax exemption and lower the estate tax rates.
Under current law, the estate tax exemption for an individual who dies this year is $2 million. The estate tax exemption is scheduled to increase to $3.5 million in 2009. Currently, the law provides that the estate tax is to be repealed for one year in 2010, and then the estate tax exemption reverts to $1 million in 2011. Estate planning can be done (utilizing the marital deduction and the estate tax exemption) so that no estate tax is owed when the first spouse dies.
According to a report of the Tax Policy Center, which is affiliated with two nonprofit research organizations in Washington, the Brookings Institution and the Urban Institute, if the estate tax is repealed, the estates of the 50,000 richest Americans who die in 2011 would save $40.4 billion in taxes.