Estate Tax Coalition

Key provisions of current law include:

About the Family Business Estate Tax Coalition (FBETC)

  • A maximum estate tax rate is 40 percent, effective January 1, 2013. While this is an increase 2012's 35 percent, it is sharply lower than the 55 percent rate that could have taken effect absent the legislation.  

  • The law permanently maintains the $5 million exemption amount, indexed to inflation. As of the end of 2012, the inflation adjusted amount is $5.12 million.

  • Unification:  The estate and gift taxes are permanently unified. This establishes a single graduated rate schedule for both the estate and gift taxes, simplifying estate planning.  

  • Spousal portability:  The law permanently allows couples to transfer any unused exemption to the surviving spouse under simplified rules.    

  • No harmful offsets—preserves valuation discounts, grantor-retained annuity trusts (GRATs) and state estate tax deductibility.

What is the estate tax and how does it hurt family-owned businesses?

The estate tax applies to property transferred at death when the value of the property exceeds the estate tax exemption.  The cost of the estate tax comes not only from paying the tax, but also from estate planning.
Much of the value of family-owned businesses is tied to illiquid assets such as land, buildings and equipment, which can force the new owner to sell the business’s assets to pay the tax.  Protecting family businesses from the estate tax is important in order to keep these businesses operating for future generations. For many family-owned businesses to keep operating after the death of the owner, they must plan for the estate tax.  Planning costs associated with the estate tax are a drain on business resources, taking money away from day to day operations and business investment.  These additional costs make it more difficult for the business owner to expand and create new jobs.

The Family Business Estate Tax Coalition (FBETC) is a grassroots coalition of over 50 national family-owned business organizations dedicated to the full, permanent repeal of the estate tax.

Current Law 

The American Taxpayer Relief Act of 2012, was a bipartisan tax compromise package that was passed at the end of 2012 and included some estate tax relief provisions for our nation's family businesses.