The proposed tax bill is now in “final form”. What that means is that it will likely be passed early next week. Without walking through the entire jungle of tax cuts for business owners and changes to the individual tax landscape, I thought it would be helpful to summarize the changes that specifically relate to the estate tax.
First, a little background.
Currently fourteen states and the District of Columbia impose a state estate tax, and six states have an inheritance tax. Fortunately for us as Michigan residents, Michigan does not have an estate or inheritance tax imposed in addition to the Federal Estate Tax. If you want to see the breakdown of which states charge an estate or inheritance tax and the amount of the tax, check out this link:
Now for the Federal Estate Tax which applies to us all. You may remember that the House Bill called for a total repeal of the estate tax. The final bill does not go to that extent, but puts in place an exemption that will result in most Americans not paying an estate tax. In effect, the proposed final bill doubles the current estate tax exemption. What does that mean?
- If you are single, you will be able to exempt the first $10.98 Million of your assets from the Federal Estate Tax
- If you are married, double that – you can exempt the first $21.96 Million of your assets from the Federal Estate Tax
The practical result of the final bill is to eliminate estate taxes on all but a handful of Americans. It appears that the bill is in final form, but stay tuned for any last minute changes and updates.