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Federal Estate Tax Exclusion Set At $5,430,000 For 2015

On January 1, 2013, Congress enacted P.L. 112- 240, the American Taxpayer Relief Act of 2012 [“ATRA”], which, among other things, sets the federal estate tax exclusion under 26 U.S.C. §2010 at $5,000,000 for estates of decedents dying in the years 2013, 2014 and 2015. But these figures have been adjusted for inflation to $5,250,000 (for 2013), $5,340,000 (for 2014), and $5,430,000 (for 2015). The maximum tax rate for that portion of an estate which exceeds the exclusion was formerly 35%; it is now 40% (for decedents dying in 2013, 2014 or 2015). Although the amount of the exclusion and the rate of taxation have been characterized as “permanent”, Congress may choose to make further changes in the future.

The exclusion had been gradually increased from $675,000 in 2000 to $3,500,000 in 2009. In 2010, the exclusion was unlimited; i.e., no tax was imposed on estates of decedents dying in that year. However, if Congress had not acted, the tax would have been restored in 2011. Congress responded by amending the statute, through the enactment of P.L. 111-312, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which set the exclusion at $5,000,000 for decedents dying in the years 2011 and 2012. As noted above, ATRA has extended the $5,000,000 exclusion through, and possibly beyond, the years 2013, 2014 and 2015.

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