To amend the Internal Revenue Code of 1986 to repeal the 1-year termination of the estate tax, to increase the estate and gift tax unified credit, and to coordinate a reduction in the maximum rate of tax with a phaseout of the deduction for State death taxes.

Summary: Estate Tax Relief Act of 2009 - Repeals provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) eliminating the tax on estates and generation-skipping transfers and the step-up in basis provisions for property acquired from a decedent for estates of decedents dying after 2009. Declares that the sunset provision (general terminating date of December 10, 2010) of EGTRRA shall not apply to title V of such Act (Estate, Gift, and Generation-Skipping Transfer Tax Provisions).

Amends the Internal Revenue Code to: (1) allow annual increases in the estate tax exclusion amount until it reaches $5 million in 2019 and inflation adjustments to such amount after 2019; and (2) phase in annual reductions in the estate tax rate between 2009 and 2019 (45% to 35% in 2019 and thereafter) and eliminate the deduction for state estate, inheritance, legacy, or succession taxes over the same period.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Estate Tax Relief Act of 2009''.

SEC. 2. RESTORATION OF ESTATE TAX; REPEAL OF CARRYOVER BASIS.

    (a) In General.--The following provisions of the Economic Growth 
and Tax Relief Reconciliation Act of 2001, and the amendments made by 
such provisions, are hereby repealed:
            (1) Subtitles A and E of title V.
            (2) Subsection (d), and so much of subsection (f)(3) as 
        relates to subsection (d), of section 511.
            (3) Paragraph (2) of subsection (b), and paragraph (2) of 
        subsection (e), of section 521.
The Internal Revenue Code of 1986 shall be applied as if such 
provisions and amendments had never been enacted.
    (b) Sunset Not To Apply.--
            (1) Subsection (a) of section 901 of the Economic Growth 
        and Tax Relief Reconciliation Act of 2001 is amended by 
        striking ``this Act'' and all that follows and inserting ``this 
        Act (other than title V) shall not apply to taxable, plan, or 
        limitation years beginning after December 31, 2010.''.
            (2) Subsection (b) of such section 901 is amended by 
        striking ``, estates, gifts, and transfers''.

SEC. 3. INCREASE IN UNIFIED CREDIT AGAINST THE ESTATE TAX.

    (a) In General.--The table in subsection (c) of section 2010 of the 
Internal Revenue Code of 1986 (relating to applicable credit amount) is 
amended to read as follows:

``In the case of estates of                              The applicable
decedents dying during:                            exclusion amount is:
        2009.........................................       $3,500,000 
        2010.........................................       $3,650,000 
        2011.........................................       $3,800,000 
        2012.........................................       $3,950,000 
        2013.........................................       $4,100,000 
        2014.........................................       $4,250,000 
        2015.........................................       $4,400,000 
        2016.........................................       $4,550,000 
        2017.........................................       $4,700,000 
        2018.........................................       $4,850,000 
        2019 or thereafter...........................    $5,000,000.''.
    (b) Inflation Adjustment.--Subsection (c) of section 2010 of such 
Code, as amended by subsection (a), is amended--
            (1) by striking ``For purposes of this section,'' and 
        inserting the following:
            ``(1) In general.--For purposes of this section,'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Inflation adjustment.--In the case of any decedent 
        dying in a calendar year after 2019, the $5,000,000 amount in 
        paragraph (1) shall be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for such calendar year, 
                determined by substituting `2018' for `1992' in 
                subparagraph (B) thereof.
        If any increase determined under the preceding sentence is not 
        a multiple of $10,000, such increase shall be rounded to the 
        nearest multiple of $10,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2008.

SEC. 4. COORDINATED REDUCTION IN MAXIMUM RATE OF TAX WITH TERMINATION 
              OF DEDUCTION FOR STATE DEATH TAXES.

    (a) Phasein of Reduction in Maximum Rate.--
            (1) In general.--The table in subparagraph (B) of section 
        2001(c)(2) of the Internal Revenue Code of 1986 (relating to 
        maximum rate) is amended to read as follows:

``In calendar year:                                The maximum rate is:
        2009.........................................       45 percent 
        2010.........................................       44 percent 
        2011.........................................       43 percent 
        2012.........................................       42 percent 
        2013.........................................       41 percent 
        2014.........................................       40 percent 
        2015.........................................       39 percent 
        2016.........................................       38 percent 
        2017.........................................       37 percent 
        2018.........................................       36 percent 
        2019 or thereafter...........................    35 percent.''.
            (2) Conforming and technical amendments.--
                    (A) Section 2001(c)(2)(A) of such Code is amended 
                by striking ``after 2002 and before 2010'' and 
                inserting ``after 2008''.
                    (B) Section 2001(c)(2)(A)(ii) of such Code is 
                amended by striking ``subparagraph (A)'' and inserting 
                ``clause (i)''.
    (b) Phaseout of Deduction for State Death Taxes.--Section 2058 of 
the Internal Revenue Code of 1986 (relating to deduction for State 
death taxes) is amended by adding at the end the following:
    ``(c) Phaseout.--
            ``(1) In general.--In the case of estates of decedents 
        dying in a calendar year beginning after December 31, 2008, the 
        deduction under subsection (a) shall be equal to the applicable 
        percentage of the amount which would (but for this subsection) 
        be the amount of such deduction.
            ``(2) Applicable percentage.--For purposes of paragraph 
        (1), the applicable percentage shall be determined in 
        accordance with the following table:

``In the case of taxes paid in            The applicable percentage is:
        calendar year:
        2009.........................................      100 percent 
        2010.........................................       90 percent 
        2011.........................................       80 percent 
        2012.........................................       70 percent 
        2013.........................................       60 percent 
        2014.........................................       50 percent 
        2015.........................................       40 percent 
        2016.........................................       30 percent 
        2017.........................................       20 percent 
        2018.........................................       10 percent 
        2019 or thereafter...........................     0 percent.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to estates of decedents dying, and gifts made, after December 31, 
2008.