Is the estate tax really dead?

Officially, the estate tax has been repealed, but only for 2010. That's due to a provision in a 2001 law that gradually reduced the estate tax rates and increased the exemption amount, setting the tax to expire completely in 2010. According to that law, the estate tax is scheduled to be reinstated in 2011 at its pre-2001 levels.

Congress expected to deal with the estate tax by the end of 2009, and the House did in fact pass a permanent extension of the tax at 2009 levels (with a 45% top rate and a $3.5 million exemption). The Senate, however, was focused on health care reform and ran out of time, leaving the estate tax issue for 2010.

Now, the expectation is that the Senate will deal with the estate tax in January, reinstating it retroactive to the first of the year. However, there is still no consensus on what the law should be and no certainty that a bill will pass quickly.

Stay tuned. Though Congress may not find it easy to reach an agreement on the estate tax, you can be sure they are not likely to have it disappear even for one year.