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Thursday, June 22, 2006

ESTATE TAX REPEAL UPDATE

With action for estate tax repeal stalled in the Senate, on June 19 House Ways and Means Committee Chair Bill Thomas (R-CA) introduced H.R. 5638, the “Permanent Estate Tax Relief Act of 2006.” This bill, while not repealing the estate tax, allows for substantial reductions in estate, gift, and GST taxes. Key aspects of the bill include:

-elimination of the provisions of existing law that would provide for no estate tax in 2010;

-reunification of estate and gift tax credit amounts;

-increase of exemption amount to $5 million by January 1, 2010;

-rate of tax on estates up to $25 million reduced to capital gains tax rates, and to twice those rates above the $25 million;

Earlier today, the bill was passed by the House. In its passage, the bill was modified to index the $5 million exclusion for inflation.

The next step will be a Senate vote on whether to proceed on the bill, which will require 60 votes to pass. This vote is expected to happen next Wednesday or Thursday.
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