New Estate Tax Benefits
Although the $1.35 trillion tax package is designed mainly to provide relief to individual taxpayers, it by no means leaves entrepreneurs out in the cold. Perhaps the biggest sigh of relief for entrepreneurs comes with the changes to the estate tax. The new law gradually raises the exclusion amount and lowers the top estate tax rate. Eventually, it repeals the tax altogether. The exclusion amount increases to $1 million for 2002 from the current $675,000. Subsequent increases raise the level to $1.5 million in 2004, $2 million in 2006 and $3.5 million in 2009.
Meanwhile, the top estate tax rate of 55 percent drops to 50 percent in 2002 and continues to decrease a percentage point each year until it reaches 45 percent by 2007. It stays there until 2010, when the estate tax is scheduled for repeal.
SOURCE: Entrepreneur magazine