When President Barack Obama recently released his 2014 budget proposal, it was revealed that the estate tax exemption may not last as long as many had previously anticipated. According to a recent article, the proposed budget would not only increase estate taxes, but it would also drop the per-person exemption from federal estate taxes.
Currently, the per-person exemption from federal estate taxes is at $5.25 million. Under the proposed budget, this number would drop to $3.5 million. The $3.5 million cap would not be indexed for inflation. The proposed budget would also increase the top tier estate tax rate to 45 percent, rather than 40 percent.
If passed, the new levels would take effect in 2018, and effectively reverse the fiscal cliff budget deal signed into law by President Obama last January. According to acting director of the Office of management and Budget, “We believe that in these fiscal times, that it’s responsible policy in 2018 for the estate tax to return to the 2009 parameters.”