Estate Tax Reform Act of 2001

The Estate Tax Reform Act of 2001 (S. 867) proposed to reduce the tax burden on inherited assets by increasing the amount of wealth individuals could pass on tax-free. Under this legislation, the "unified credit" exemption would have gradually risen from $700,000 to $2 million by the year 2006. Additionally, the bill sought to expand tax deductions for family-owned businesses, allowing families to shield up to $3.375 million of a business's value from estate taxes.

For the average citizen, these changes were designed to protect more family farms and small businesses from being sold to pay federal death taxes. By raising the exemption limits and allowing spouses to combine their deductions, the bill aimed to simplify estate planning and ensure that more middle-class and upper-middle-class assets could be transferred to the next generation without tax liability. Although introduced in 2001, the bill did not advance past the committee stage.