According to a new report from the IRS, the number of Americans who left large fortunes increased, but the overall amount of estate taxes declined.
A major factor was the decline in the estate tax rate, and increases to the exclusion rate that were passed as part of President Bush's tax overhaul in 2001. Estate taxes only apply to estates greater than $1 million, up from $675,000, and double for married couples.
The number of estates reporting income over $20 million increased nearly 8-percent, form 469 to 505, and the average value these estates was $62 million. Overall the estate tax generated 20.7 billion in 2003, a decline of more than 12% from estates of $1 million or more than in 2001, despite a 1.4 percent increase in total value of such states.
While the maximum estate tax rate is 49% (for 2003), and will decline, 1% each year following (48% in 2004, 47% in 2005, 46% in 2006, and 45% 2007-2009), the average estate tax paid by estates of $1 million-$2.5 million feel to 11.2% from 15.2. For the ultra wealthy, their average estate tax rate was dropped to 16.5% from 18.4%.