The Wall Street Journal reported this week that President-elect Obama wants to freeze the estate tax credit at its current level. This means that estates with less than $3.5 million in value can be transferred free of the estate tax at death. In other words, the vast majority of us (98%) won't have to worry that our children's inheritance will be reduced by a 45% tax when we die. Of course, the majority of us are actually more worried about HAVING an inheritance to pass along to our children some day, but that's a different story.
Obama's proposal also means that the total repeal of the estate tax, which would have meant that even the very rich could have passed their entire estates free of estate tax at death, will not occur in 2010 as planned. It also means the estate tax credit won't reset to Clinton-era levels of $1 million dollars and a 55% tax rate in 2011, which is when the current legislation, passed as part of the 2001 Bush tax cuts, was scheduled to expire.
The WSJ reports that the Senate Finance Committee will move within weeks on legislation to reverse that law, and Mr. Obama is expected to detail his estate-tax preservation proposal in his budget next month.