The Republican House and Senate gains in the recent elections increase the likelihood that we will see legislation before the end of the year extending in some manner the Bush tax cuts. There is increasing talk and speculation that the current tax rates of 15% for capital gains and qualified dividends and 35% for ordinary income may be preserved for one to three more years. While President Obama still believes the current rates should be made permanent for couples earning less than $250,000 per year, the Republicans are refusing to allow that issue to be considered separately from the rates for higher income taxpayers. In order to insure that rates do not increase on January 1 for those taxpayers earning less than $250,000 per year, the President may have to agree to a temporary extension of the current rates for all taxpayers.
This debate over income tax rates seems to have pushed any estate tax legislation to the back burner for the moment, but you never know what might happen. The current Congress is expected to adjourn around December 17th so anything that is going to happen will happen by then. We will circulate a summary of anything that does get enacted within a few days of the time it happens, so stay tuned.