“[M]assive, massive confusion.”
Senate Finance Committee Chairman Max Baucus, on the estate tax in 2010
As you may have read in the news, the estate, gift, and generation-skipping transfer (GST) taxes are all facing significant uncertainty in 2010. In 2009, the estate and GST tax exemptions were $3.5 million per person with a 45% rate. As of January 1, 2010, both the estate and GST taxes have essentially been repealed. The gift tax remains in place, but the rate has dropped from 45% to 35%. Though this may seem a happy state of affairs, if Congress does nothing, the estate and GST taxes will return in 2011 and the gift tax rate will rise. The estate tax exemption will be only $1 million, with a rate of 55%.
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