Federal Estate Taxes

Under current law, federal estate tax affects only the wealthiest of Americans--by most estimates, the top half of one percent of estates. Only those who leave a taxable estate of more than $5.12 million (for 2012 deaths), or twice that amount for a married couple, need to pay the tax. The tax rate has been cut as well, to its lowest level in many years.

There is, however, great uncertainty about the future of the federal estate tax. If Congress doesn't act this year, then on January 1, 2013, the tax will go back to what it was before the Bush tax cuts: there will be an exemption of only $1 million, and the top rate will be 55%. This isn't likely to happen; Congress will probably amend the law so that fewer people actually owe estate tax. But even if the old rules are restored, most Americans still won't ever have to pay estate tax.