Senate Passes Tax Rates Extension as Estate Tax Fight Looms in House

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The Senate votes 81-19 to extend all existing individual income tax and capital gains and dividends tax rates for two years and set the estate tax rate at 35 percent with a $5 million per person exemption level. In addition to extending the 2001 and 2003 tax cuts, the Senate-passed bill would also create a two-year “patch” for the alternative minimum tax and extend dozens of popular short-term tax breaks, including the research and development tax credit and the deduction for state and local income taxes. The House will consider the measure (S. Amdt. 4753 to H.R. 4853) today under a structured rule that offers flexibility on the controversial estate tax language. The legislation approved by the Senate also would extend several clean energy tax credits.