April 23, 2009 | Read Time: 1 minute
The House and Senate have passed budget outlines that differ significantly in how they would apply the estate tax.
The House version follows what President Obama has proposed and umbrella groups of nonprofit organizations have embraced: keeping the estate tax at levels that are already in effect this year.
But the Senate version would cut the estate tax, a move that alarms many charitable organizations.
The two houses will work out differences in a conference committee.
In 2001, Congress passed the current law, which gradually phases out the estate tax through 2009 and repeals it for 2010. In 2011, however, the current law is set to expire and estate-tax levels that applied years earlier go back into effect unless Congress takes action.
The budget outline passed by the House would keep the estate tax at 2009 levels (and do away with the 2010 repeal). Heirs could exempt $3.5-million from taxes ($7-million for couples), with amounts above that taxed at 45 percent.
The Senate’s budget outline would raise the exemption for individuals to $5-million ($10-million for couples) and lower the tax rate to 35 percent.
