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Estate Tax Rates
 
Applicable Exclusion Amounts
 
 

The estate tax on estates of decedents is imposed on the decedent's taxable estate (gross estate less deductions).  A credit (based on the Applicable Exclusion Amount) against estate tax is allowed, as well as other credits.

 

The gift tax is imposed on transfers of property by gift. The gift tax is based on the cumulative value of current and prior taxable gifts. A credit (based on the Applicable Exclusion Amount) against gift tax is allowed.

 

After the Applicable Exclusion Amount of $1,500,000 is applied to estates
in 2005, marginal tax rate is 45% up to $2 million in value and and 47% over
$2 million as shown in the tables below.
 
 
(A) (B) (C) (D)

 

Amount subject to tentative tax...

 

Tax on amount in column A*

 

 

Tax rate on excess over amounts in Column A*

 

exceeding

but not exceeding

 

 

 

$---

$10,000

$---

18%

10,000

20,000

1,800

20%

20,000

40,000

3,800

22%

40,000

60,000

8,200

24%

60,000

80,000

13,000

26%

80,000

100,000

18,200

28%

100,000

150,000

23,800

30%

150,000

250,000

38,800

32%

250,000

500,000

70,800

34%

500,000

750,000

155,800

37%

750,000

1,000,000

248,300

39%

1,000,000

1,250,000

345,800

41%

1,250,000

1,500,000

448,300

43%

1,500,000

2,000,000

555,800

45%

2,000,000

---

780,800

47%**

     

 

**The Economic Growth and Tax Relief Reconciliation Act of 2001 phases down the maximum estate and gift tax rate in steps for calendar years after 2002 and before the repeal of the estate tax in 2010 and reduces the maximum gift tax rate in effect after the repeal of the estate tax. See table below.

 

 
 

 

Year

 

Estate Tax Applicable Exclusion Amount

 

Estate Tax Credit (applicable credit amount)

 

Gift Tax Applicable Exclusion Amount

 

Maximum Gift and Estate Tax Rate

 

2005

 

$1,500,000

 

555,800

 

$1,000,000

 

47%

 

2006

 

$2,000,000

 

780,800

 

$1,000,000

 

46%

 

2007

 

$2,000,000

 

780,800

 

$1,000,000

 

45%

 

2008

 

$2,000,000

 

780,800

 

$1,000,000

 

45%

 

2009

 

$3,500,000

 

1,455,800

 

$1,000,000

 

45%

 

2010

 

N/A (taxes repealed)

 

N/A (taxes repealed)

 

$1,000,000

 

Top individual income tax rate (Gift tax only)

2011-

$1,000,000

345,800

$1,000,000

55%

 

 
 

Year

Estate Tax Exemption Equivalent (now known as Applicable Exclusion Amount)

Estate Tax Credit (applicable credit amount)

Maximum Gift and Estate Tax Rate

Top Marginal Rate Begins at (in millions)

1977

120,667

$30,000

70%

5.0

1978

134,000

34,000

70%

5.0

1979

147,333

38,000

70%

5.0

1980

161,563

42,500

70%

5.0

1981

115,625

47,000

70%

5.0

1982

225,000

62,800

65%

4.0

1983

275,000

79,300

60%

3.5

1984

325,000

96,300

55%

3.0

1985

400,000

121,800

55%

3.0

1986

500,000

155,800

55%

3.0

1987-1997

600,000

192,800

55%***

3.0

1998

625,000

202,050

55%

3.0

1999

650,000

211,300

55%

3.0

2000

675,000

220,550

55%

3.0

2001

675,000

229,550

55%

3.0

2002

1,000,000

345,800

50%

2.0

2003

1,000,000

345,800

49%

2.0

2004

1,500,000

555,800

48%

2.0

 

*** Between 1987 and 1997 there was a 5% surtax (in addition to the 55% marginal rate) between $10,000,000 and $21,040,000.  This phased out the graduated rates to make the tax a flat 55% for estates above $21,040,000.  

 
 

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