The North Carolina estate tax is reinstated effective for those decedents dying on or after January 1, 2011, if a federal estate tax return is required. The 2010 Tax Relief Act, which became law December 17, 2010, reinstates the federal estate tax retroactively to January 1, 2010. The federal law provides an exclusion of $5,000,000 (the portability provision provides an exclusion amount of $10,000,000 for married couples) and a maximum estate tax rate of 35%. The federal law also provides that the estate of a decedent dying in 2010 may elect not to pay federal estate tax, and receive a modified carryover basis in the property passing through the estate.
Although there is no North Carolina estate tax return filed for those who died during 2010, North Carolina law conforms to the exclusion amounts and gives estates that chose to pay federal estate tax and receive the stepped-up basis in the property passing through the estate to receive the stepped-up basis for North Carolina purposes. For decedents dying on or after January 1, 2013, the estate tax provisions return to the 2001 rates and exclusion amounts. (SB 267, s. 11, S.L. 11-330.)