By: John Hillman, CFP®, ChFC®, CLU, CLTC
On January 2, 2013, Congress passed the American Taxpayer Relief Act. It was named for the majority of Americans for whom a 2% restoration of the payroll tax is burdensome. If that was a modest tax increase for you, then you will want to read what follows. Let’s take a look at a few examples from this latest tax law.
Congress made “permanent” the $5 million exemption from federal estate taxes. Of course, “permanent” means that it will stay that way through the next change. The exemption is indexed. Therefore, in 2013 the exemption is $5,250,000. However, Illinois’ estate tax exemption is $4,000,000. That differential can lead to some nasty surprises for Illinois estates—as in six figures of tax just on the differential amount. There are some interesting quirks in the current federal law.
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