What is an Estate Tax Exemption?
Almost every large or small transfer of wealth is taxed in some way, and in the United States, taxes are also imposed on the transfer of inheritances conferred by a deceased person. This is known as the estate tax. The federal government allows for a certain amount of the taxable estate to be exempted from any taxation. This amount can change from year to year, based on the provisions of the tax code. For example, in the year 2006, the exemption amount was $2 million U.S. Dollars (USD), meaning that for an estate of $2.5 million USD in 2006, the taxable amount would be $500,000 USD, with the other $2 million USD is exempted from the tax.
