Estate Tax Rates Jump from 0 to 55% in 2016-Fiction!
Summary of eRumor:
It’s been rumored that estate taxes jumped from 0% to 55% on January 1, 2016.
Federal estate tax rates didn’t jump from 0% to 55% on January 1, 2016.
In fact, the vast majority of estates will pay no federal estate tax at all in 2016. The basic exclusion amount for estate taxes has risen to $5.450 million, up from $5.430 million in 2015. That means estates worth less than $5.450 million don’t pay any estate tax at all.
And the claim that estate tax rates have risen couldn’t be further from the truth.
In 2001, estates worth more than $675,000 were taxed at the top rate of 55%. By 2013, however, the top estate tax rate had dropped to 40%, and only estates worth more than $5.25 million were taxed. Today, 40% remains the top estate tax rate, and that only applies to estates worth more than $5.450 million, according to the Tax Foundation.
Overall, the estate tax accounts for less than 1% of total federal revenue each year. In 2014, the Office of Budget Management reported that the estate tax raised $19.3 billion, about 0.6% of total federal revenue.
So, reports that the estate tax rate has jumped at all — let alone from 0% to 55% — couldn’t be any more wrong.