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State Estate and Gift Tax Revenue , Record No.: RS20853, Date: April 08, 2005 1 (April 8, 2005)

handle is hein.tera/crstax0160 and id is 1 raw text is: Order Code RS20853 Updated April 8, 2005 CRS Report for Congress Received through the CRS Web State Estate and Gift Tax Revenue Steven Maguire Economic Analyst Government and Finance Division Summary 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. The federal estate tax will be repealed gradually by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Repeal of the federal estate tax and increase of the exclusion amount (or its credit equivalent) as prescribed by EGTRRA will also repeal or diminish most state estate, inheritance, and gift taxes.' In FY2003, state estate and gift tax revenue was 1.22% of total state tax revenue, but there was considerable variation among the states.2 This report will briefly describe the federal credit for state estate taxes and provide data on the relative importance of estate, inheritance, and gift taxes to each state and the District of Columbia. ' For the remainder of the report, all state taxes that are triggered by death will be referred to as state estate taxes. State estate taxes, thus include state inheritance taxes, succession taxes, and estate taxes. 2 U.S. Census Bureau, Governments Division, State Government Tax Collections, website [http://www.census.gov/govs/www/statetax03.html], visited February 2005. Congressional Research Service • -The Library of Congress

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