In January 1, 2002, the value of property that will escape federal estate tax increases from the current $675,000 to $1 millon, where it will remain through the end of the year 2003. For the years 2004 and 2005 the exemption will be $1.5 million, increasing to $2 million for the years 2006, 2007 and 2008. The exempt amount jumps again in 2009 to $3.5 million.
The increase in the exempt amount to $1 million next year is significant because it is likely to affect a sizeable portion of the population. As we get to the $2 million level in 2006 substantially fewer individuals will be affected.
Oh, by the way, the estate tax is repealed entirely for the year 2010, but returns in the year 2011 with only a $1 million exemption. (Congress is likely to change this before 2011.)
– Kevin Palmer