UNIFIED RATE SCHEDULE FOR FEDERAL ESTATE AND GIFT TAX
| TAXABLE ESTATE |
| From | To | Tax | Tentative Tax % | On Excess Over |
| $0 | 10,000 | 0 | 18% | 10,000 |
| 10,000 | 20,000 | 1,800 | 20 | 20,000 |
| 40,000 | 60,000 | 8,200 | 24 | 40,000 |
| 60,000 | 80,000 | 13,000 | 26 | 60,000 |
| 80,000 | 100,000 | 18,200 | 28 | 80,000 |
| 100,000 | 150,000 | 23,800 | 30 | 100,000 |
| 150,000 | 250,000 | 38,800 | 32 | 150,000 |
| 250,000 | 500,000 | 70,800 | 34 | 250,000 |
| 500,000 | 750,000 | 155,800 | 37 | 500,000 |
| 750,000 | 1,000,000 | 248,300 | 39 | 750,000 |
| 1,000,000 | 1,250,000 | 345,800 | 41 | 1,000,000 |
| 1,250,000 | 1,500,000 | 448,300 | 43 | 1,250,000 |
| 1,500,000 | 2,000,000 | 555,800 | 45 | 1,500,000 |
| 2,000,000 | 2,500,000 | 780,800 | 49 | 2,000,000 |
| 2,500,000 | 3,000,000 | 1,025,800 | 53 | 2,500,000 |
| 3,000,000 | 1,290,800 | 55 | 3,000,000 |
The benefit of the unified credit is phased out by a 5% surcharge on estates
between $10,000,000 and $18,340,000
Comments: Each person is allowed $700,000 as an exemption to estate tax during their lifetime. (Caveats apply- for example, I am only referring to U.S. citizens.) This is equal to a tax of $229,800. Anything over this amount left in your net estate and the estate tax starts at 37%.
You can gift away assets during your life, but anything over $11,000 per year is generally an offset against your $700,000 lifetime exemption. For example, gifting $25,000 to son (spouses are allowed any amount- but again remember there are caveats) results in a $14,000 charge against the $700,000 leaving $686,000 to escape taxes when you die.
ESTATE TAX STATISTICS: The 1996 average tax on estate of $600,000 to $1,000,000 was 6%. It cost the IRS 2 cents on the dollar to administer the tax and say that the combined private and government costs totaled about 7 cents on the estate tax dollar.
Size of Estate Percent of Percentage
in $ Millions Estate Tax of Estate Tax
_____________________________________________
0.6 to 1 5. 6 5.6
1 to 2.5 25.6 31.2
2.5 to 5 20.3 51.5
5 to 10 14.9 66.4
10 to 20 11.5 77.9
over 20 22.1 100.0
The recent report noted that it is NOT estate taxes that cause most businesses to fail to pass on the asset to beneficiaries. The primary reason "is the burden on heirs who want to keep the business and must raise cash to pay off the heirs who do not".
2001 New Estate Deductions:
2002 $1 million 50%
2003 $1 million 49%
2004 $1.5 million 48%
2005 $1.5 million 47%
2006 $2 million 46%
2007 $2 million 45%
2008 $2 million 45%
2009 $3.5 million 45%
2010 N/A
2011 (taxes repealed) maximum individual rate (gift tax only)
Taxes (2005) The IRS said 2.1% of people who died in 2001 left estates subject to taxation, which brought more than $23 billion to the government in tax revenue.
This year, estates worth up to $1.5 million for an individual or $3 million for a couple owe no tax. The top tax rate stands at 47%. Just before its complete repeal, in 2009, the exemption increases to $3.5 million for an individual or $7 million for a couple. The tax rate falls to 45%.