The extension of the Bush tax cuts got all the headlines, but there was also an agreement reached on the estate tax between the Obama administration and Congressional Republicans earlier this week. The status quo was that after a year of no estate tax in 2010, it was scheduled to return in 2011 at a rate of 55 percent and an exemption level of $1 million per estate.
The new rules would have a tax rate of 35 percent, and an exemption level of $5 million. That would put inherited wealth on roughly an equal footing with ordinary income for tax purposes.
One thing to remember, though, is that this is an agreement in principle, between the president and the GOP leadership, and no actual legislation has been voted on. We still don't know such things as when all this would take effect (although January 1 is a pretty good guess). We don't even know that the final legislation will take this form. This whole package may still have a long way to go.
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