2008 Estate Tax Predictions

Here is a prediction for how Congress will address federal estate tax issues this session from Tom Herman, What Congress Is Likely To Do to Your Tax Bill, Wall St. J., May 14, 2008, at D3:

Expect lots of heated rhetoric in coming months about the need for major changes in the federal estate tax — but don’t expect action during 2008. “There isn’t going to be estate-tax reform this year,” says Sen. Jon Kyl, an Arizona Republican. Look for Congress eventually to raise the basic exclusion and cut the top tax rate, lawyers say. This year, the basic exclusion is $2 million (although transfers to a spouse typically are free from the tax).

Next year, the exclusion jumps to $3.5 million. Under current law, the tax is scheduled to disappear completely in 2010 and then return in 2011 with a $1 million exclusion.

Outlook for this year: Forget about it.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.