The exemption from federal estate taxes has increased over the past 12 years while the estate tax rate has decreased. Below is a chart that shows the increases in the estate tax exemption and decreases in the tax rate from 1997 through 2009. The federal estate tax is currently scheduled to disappear in 2010 and then reappear in 2011 with only a $1,000,000 exemption and 55% tax rate, but no one really believes that President Obama and Congress will let this happen:
What is the Future of the Estate Tax?Latest update on Dec. 18, 2009 - Federal Estate Tax Will Die on January 1, 2010! And do not overlook state estate tax and inheritance tax liability since 18 states and the District of Columbia currently collect an estate tax at the state level and seven states collect a state inheritance tax: State Estate Tax Chart
State Inheritance Tax Chart So while it is quite possible that your estate will not owe any federal estate taxes, your estate may owe state estate taxes since the state estate tax exemption for several of the most populated states is $1,000,000 or under, or your heirs may have to pay a state inheritance tax.
Historical Federal Estate Tax Exemptions and Rates
| Year | Estate Tax Exemption | Top Estate Tax Rate |
| 1997 | $600,000 | 55% |
| 1998 | $625,000 | 55% |
| 1999 | $650,000 | 55% |
| 2000 | $675,000 | 55% |
| 2001 | $675,000 | 55% |
| 2002 | $1,000,000 | 50% |
| 2003 | $1,000,000 | 49% |
| 2004 | $1,500,000 | 48% |
| 2005 | $1,500,000 | 47% |
| 2006 | $2,000,000 | 46% |
| 2007 | $2,000,000 | 45% |
| 2008 | $2,000,000 | 45% |
| 2009 | $3,500,000 | 45% |
