With the General Election now over, any political decisions Congress makes will have a direct impact on small business owners since estate tax rules are fixed only through 2012.
After 2012, the rules are set to return to pre-Bush era rules. Instead of the $5 million gift tax and estate tax exemption that applies for 2011 ($5.12 million in 2012), the exemption will be $1 million. But that depends on what Congress will do.
“We don’t know just yet how this will be resolved by the end of the year,” said Rep. Charlie Dent, whose district includes Northampton and Lehigh counties.
“It is my hope that the December 2010 agreement will be extended.”
The estate tax went away in 2010 but came back in 2011, with a maximum rate of 35 percent, said Dent.
The estate tax is something that clearly affects the future plans of business owners, particularly small, family-owned businesses, he added.
In addition to extending the $5 million exemption, Dent is also hoping that Congress will tackle a major tax reform package in the coming year.