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Looking at the impact of Trump on the federal estate tax, P.2

In our previous post, we looked briefly at some of President-elect Trump’s planned tax policies, noting that changes are coming to federal estate tax. As we pointed out, federal estate tax law has gone through significant changes in recent years, particularly regarding the estate tax exemption, which was $5.43M for the 2015 tax year.

Trump’s plan is to repeal the estate tax, though he does plan to tax capital gains held until death worth over $10 million. The idea with this policy, according to Trump’s website, is to exempt small businesses and family farms. The repeal of the estate tax, though, is a big change for wealthy Americans. 

For the sector of Americans with more modest wealth to their name, a repeal of federal estate tax is less of a change given the fact that the estate tax exemption amount has been so high in recent years. It is those who have been on the cusp of the exemption amount who will benefit from such a change the most, of course, since the threat of additional taxation would be removed.

Estate taxation still does occur at the state level, with different states handling the matter differently. Florida used to impose estate tax, but this was eliminated in 2004 since it was based solely on the federal credit for state estate taxes. That being said, estate tax returns still need to be filed to remove the automatic Florida estate tax lien.

We’ll say more about this issue in a future post. 

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