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Congress has changed the estate tax rates and exemptions for 2004-2009. The exemption for each decedent increases and the rates decrease. The estate tax is due to expire, with no estate tax being imposed for anyone dying after December 31, 2009.
The United States Estate Tax is a "death tax" imposed by the federal government on all assets owned at the time of death, based on the current value of all assets. All assets are taxable, such as real property, stocks and bonds, bank accounts, cars, life insurance, employee benefits, annuities, furniture, and boats.
Any assets passing to a husband or wife are exempt from tax, provided the surviving spouse is a United States citizen. If not a citizen, a special type of trust must be used to avoid tax. Any assets left to a qualified charity are also exempt for tax. Liabilities are deducted so that a tax is only paid on the person's taxable estate or net worth (assets minus liabilities).
The chart below is designed to show the amount of tax payable, based on the net value of a person's estate (assets minus liabilities) at death, depending upon the year of death. The chart lists the amount of tax due depending upon the taxable estate of the decedent (assets minus liabilities).
If a single individual died in 2005 with $1,800,000 of assets and $100,000 of liabilities, the taxable estate would be $1,700,000. The tax on $1,700,000 for an individual dying in the year 2005 is $90,000.00.