The end of the year is bringing more than the holidays. The federal estate tax could be eliminated entirely in 2010 unless Congress intervenes, Reuters reports, before reverting to an exemption for the first $1 million of an estate, while the remainder of the estate will be taxed at 55 percent. Under current tax law, the first $3.5 million of an individual’s estate are exempt; the remainder is taxed at a maximum rate of 45 percent.
The House is expected to take up the issue next week, but tax analysts expect a one-year extension will be the most likely outcome, considering Congress’ full agenda.
Critics argue that estate taxes affect small business owners, but the Congressional Budget Office found little evidence to suggest the tax hinders the creation of small businesses, according to the news agency.