Is the Tax on Estates Gone?

The tax on estates is not gone.  Estate tax is alive and well.

The Federal estate tax went away in 2010 (for only one year) and Arkansas estate tax was tied to it.  So in 2010, Arkansas estate tax went away.  The Arkansas legislature hasn’t made a move to bring it back, yet.

The Federal estate tax was brought back in 2011.  But the limits were set much higher and tied to inflation.

As of 2019, an individual can leave up to $11,400,000 ($11.4 million) before estate tax starts.  A couple, if the elect to use the portability provision, can leave up to $22,800,000 before estate tax starts.  If estate tax does kick in, the tax starts at 40%.

The gift tax is tightly coupled to the tax on estates.  For every dollar you give away in your lifetime, it reduces the final estate tax limit dollar for dollar.  So, if you give away $1,000,000 in your lifetime, it would reduce the exemption on the estate to $10,400,000 (down from $11,400,000). 

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