February 11, 2003

States Can Avert the Loss of Revenue from Federal Estate Tax Repeal

PDF of fact sheet
HTM of full report
PDF of full report

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A new report from the Center on Budget and Policy Priorities, Why States Should Act Now to Preserve Their Estate and Inheritance Taxes, explains why states should protect themselves from the effects of the phaseout of the federal estate tax.  The 2001 federal tax legislation repeals the estate tax by 2010 and also effectively repeals by 2005 the state “pickup” taxes through which states share in federal estate tax collections.  States can prevent this loss of revenue by “decoupling” from the federal change and, to date, 17 states plus the District of Columbia are decoupled from the federal changes.[1]  The Center’s report explains that other states should follow suit because:

End Note:

[1] Eleven states have acted to decouple.  In addition, the estate taxes of another six states plus the District of Columbia are written in such a way that the state will not conform to the federal change unless it takes legislative action, and none have done so.  Also, 12 states continue to levy an estate or inheritance tax as well as a pickup tax.