The Federal Estate Tax in 2009 - a look back

Federal estate taxes were first collected in 1916. Thanks to 2001 tax legislation, the estate tax is scheduled to be phased out in 2010 (something nobody believes will occur). The table below shows the current exemption schedule and the tax rate applied to property over that amount.

If no Congressional action is taken by Dec. 31, the federal estate tax will disappear in 2010 but return in 2011 with the more costly, pre-law-change rules in effect; that is, a 55 percent tax rate with only the first $1 million of an estate exempted from taxation.

Year Exemption Amount Highest Rate Over Exemption
2002 & 2003 $1 million 50% in 2002
49% in 2003
2004 & 2005 $1.5 million 48% in 2004
47% in 2005
2006 - 2008 $2 million 46% in 2006
45% in 2007 & 2008
2009 $3.5 million 45%
2010 No Estate Tax No Estate Tax
2011 $1 million 55%