This morning at 1:39 a.m. EST, the Senate passed the American Taxpayer Relief Act by a margin of 89 Yeas to 8 Nays (and 3 not voting). The bill is an amendment to the House's Job Protection and Recession Prevention Act and with regard to estate taxes, it permanently extends the rules that went into effect in 2011 with one exception - the maximum tax rate is increased from 35 percent to 40 percent. If the bill is passed by the House and signed into law by President Obama, then this means that for 2013 the federal estate tax, gift tax and generation skipping transfer tax exemptions will all be the same amount, which will be $5 million as indexed for inflation, so somewhere north of $5.12 million.
The House will reconvene at noon today and House Republicans are set to meet at 1 p.m., so stay tuned for updates.
Updates on January 1, 2013
4:45 p.m. EST - House Republicans have voiced their dismay over the bill passed by the Senate because it lacks any significant spending cuts - in fact, the Congressional Budget Office has projected that instead of reducing the deficit the bill will actually add $3.9 trillion in new debt over the next ten years. House Republicans are now weighing all of their options, including amending the bill to include spending cuts. Here's the problem with this approach - members of the Senate have already left town, and with the current congressional session set to end at noon on January 3, there may not be enough time for the current members of Congress to get it all sorted out. If this happens, then the whole process will have to begin again from scratch after the new members of Congress are sworn in, which means that the House will have to pass a brand new bill that can then be taken up by the Senate.
7:45 p.m. EST - The House went into recess at 7:00 p.m. EST with House Republicans weighing two options - amending the Senate's bill to include a package of spending cuts, or voting on the bill as is.
8:40 p.m. EST - Word on the Hill is that the House will vote on the Senate bill without any amendments. The rules committee was set to meet beginning at 8:00 p.m. EST which means that the bill should come up to the floor around 10:00 p.m. EST.
10:25 p.m. EST - Expect the House to vote around 11:00 p.m. EST to pass the American Taxpayer Relief Act.
11:05 p.m. EST - The House voted 257 to 167 in favor of the bill, but it was House Democrats who pushed it over the top - Democrats voted 172 to 16 in favor of it, while Republicans voted 151 to 85 against it. Notable Republican yea votes included that of House Speaker John Boehner (Ohio), who rarely votes due to his position, and Budget Committee Chairman Paul Ryan (Wisconsin), the former vice presidential candidate, while notable Republican nay votes included Majority Leader Eric Cantor (Virginia) and Majority Whip Kevin McCarthy (California). President Obama said that he would sign the bill into law, but it is not known when since he is expected to head back to Hawaii.
Update on January 2, 2013
4:45 p.m. - Now that the dust has settled, it appears that the federal estate tax exemption, gift tax exemption and generation skipping transfer tax exemption will each be around $5.27 million for 2013 (caution - this is just an estimate, the actual numbers have not been released yet and will be updated when they are made available). The top tax rate will be set at 40 percent, which is the rate as stated in the bill. Of course, the president has already headed back to Hawaii to resume his holiday vacation, but he still has to sign the bill into law.
Update on January 3, 2013
1:45 p.m. - President Obama signed the fiscal cliff bill into law late last night from his Hawaiian vacation home using an autopen, so it's official, we went over the cliff for a few days and then right back up near the top. Word on the street is that the estate tax, gift tax and generation skipping transfer tax exemptions will be $5.25 million each for 2013, which is slightly lower than my estimate of $5.27 million. In addition, portability of the estate tax exemption has been made permanent and the pick up tax did not return.