State Estate and Gift Tax Revenue

Publication Date: April 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

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Abstract:

P.L. 107-16, the Economic Growth and Tax Relief Reconciliation Act of 2001, repeals the federal estate tax for decedents that die in 2010. In addition, the act repeals the credit for state estate taxes for decedents dying after December 31, 2004, and replaces the credit with a deduction. In most states, the repeal of the tax and the significant increase in the federal exclusion will also repeal or diminish state estate, inheritance, and gift taxes. Some state budgets depend on the estate tax more than others. As a percentage of total tax revenue collected from FY1984 to FY2003, state estate tax contributions ranged from 0.12% in Alaska to 3.58% in New Hampshire. When the federal "credit for state death taxes" is changed to a deduction (beginning in 2005), 28 states, including Alaska and New Hampshire, will no longer levy estate taxes. Several bills introduced in the 109th Congress would repeal the sunset for estate tax repeal: H.R. 8, H.R. 183, S. 7, and S. 420. Repeal of the sunset would make repeal of the estate tax permanent and retain other modifications to the valuation of assets at death and gift taxes implemented by EGTRRA. This report will be updated as events warrant.