The U.S. Senate will most likely debate the federal estate taxAn estate tax is imposed on the net value of an individual’s taxable estate, after any exclusions or credits, at the time of death. The tax is paid by the estate itself before assets are distributed to heirs. this week, but lawmakers on Capitol Hill aren’t the only ones dealing with estate taxes. Kansas Governor Kathleen Sebelius recently signed legislation to separate Kansas’ estate taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. from the federal estate tax. The legislation creates a “stand alone” estate tax for Kansas, but also mandates that it be phased out by January 1, 2010. From State Tax Today (subscription required):
“SB 365, signed May 22, is effective for the estates of decedents dying on and after January 1, 2007, but it also provides for the ultimate sunset of the estate tax, which Kansas has imposed in one form or another since 1909. A set of brackets designed to be revenue-neutral is provided for tax years 2007 to 2009, with estates valued at $1 million and below exempt from the tax. Rates for those tax years will range as follows:
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2007 — from 3 percent to 10 percent;
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2008 — from 1 percent to 7 percent; and
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2009 — from 0.5 percent to 3 percent.
The tax expires entirely for the estates of decedents dying on and after January 1, 2010. The legislation was introduced and studied by a Senate tax subcommittee after discussion of the need to eliminate the increasing administrative and compliance complexities of the state’s current estate tax.”
The U.S. Senate will soon decide the fate of the federal estate tax. Regardless of their verdict, Kansas’ estate tax will soon whither on the vine.
For a recent report we published on the economic problems with the federal estate tax, click here.
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