Right now, many wealthy Virginians can expect to pay hefty estate taxes upon death. But soon, the state's richest residents could expect to pay more if President Obama has his way. Under his proposal for 2015, the middle class will see more tax breaks, while millionaires will pay more taxes.
Obama is looking to raise taxes on the rich in order to reduce the deficit. Not only will those earning $1 million or more per year be faced with paying 30 percent in taxes at a minimum, but they will also have to pay more upon death. Obama is looking to turn back the clock to 2009 and use the estate tax exemption levels and rates that were applicable in that year.
Right now, the exemption level for federal estate tax is set at $5.25 million per person and $10.5 million per couple. Under Obama's proposal, that level would drop to $3.5 million. On the portions of the estate that are taxable, the tax rate would increase by 5fove percent to 45 percent. Over the course of a decade, this move is expected to earn the federal government $118 billion.
Although this proposal would not affect most people, it will greatly impact those who have between $3 million and $5 million in assets. In addition, the more a person owns in assets, the more taxes they will have to pay. If the proposal becomes a law, millionaires will want to spend some time reviewing their estate planning documents to ensure that they save as much on taxes as possible.
Source: CNN Money, "Obama's budget: Help for workers, taxes for the rich," Jeanne Sahadi, Mar. 4, 2014