109TH CONGRESS 
2D SESSION 
H. R. 5638
AN ACT 
To amend the Internal Revenue Code of 1986 to increase 
the unified credit against the estate tax to an exclusion 
equivalent of $5,000,000 and to repeal the sunset provi-
sion for the estate and generation-skipping taxes, and 
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Permanent Estate Tax 
Relief Act of 2006’’. 
SEC. 2. REFORM AND EXTENSION OF ESTATE TAX AFTER 
2009. 
(a) RESTORATION
OF UNIFIED CREDIT AGAINST 
GIFT TAX.—Paragraph (1) of section 2505(a) of the In-
ternal Revenue Code of 1986 (relating to general rule for 
unified credit against gift tax), after the application of 
subsection (g), is amended by striking ‘‘(determined as if 
the applicable exclusion amount were $1,000,000)’’. 
(b) EXCLUSION EQUIVALENT OF UNIFIED CREDIT 
EQUAL TO $5,000,000.—Subsection (c) of section 2010 
of such Code (relating to unified credit against estate tax) 
is amended to read as follows: 
‘‘(c) APPLICABLE CREDIT AMOUNT.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the applicable credit amount is the amount of 
the tentative tax which would be determined under 
the rate schedule set forth in section 2001(c) if the 
amount with respect to which such tentative tax is 
to be computed were the applicable exclusion 
amount.
‘‘(2) APPLICABLE EXCLUSION AMOUNT.—
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the applicable exclusion amount is 
$5,000,000. 
‘‘(B) INFLATION
ADJUSTMENT.—In the 
case of any decedent dying in a calendar year 
after 2010, the dollar amount in subparagraph 
(A) shall be increased by an amount equal to—
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such 
calendar year by substituting ‘calendar 
year 2009’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
If any amount as adjusted under the preceding 
sentence is not a multiple of $100,000, such 
amount shall be rounded to the nearest multiple 
of $100,000.’’. 
(c) RATE SCHEDULE.—
(1) IN
GENERAL.—Subsection (c) of section 
2001 of such Code (relating to rate schedule) is 
amended to read as follows: 
‘‘(c) RATE SCHEDULE.—The tentative tax is equal 
to the sum of—
‘‘(1) the product of the rate specified in section 
1(h)(1)(C) in effect on the date of the decedent’s 
death multiplied by so much of the sum described in 
subsection (b)(1) as does not exceed $25,000,000, 
and 
‘‘(2) the product of twice the rate specified in 
section 1(h)(1)(C) in effect on the date of the dece-
dent’s death multiplied by so much of the sum de-
scribed in subsection (b)(1) as equals or exceeds 
$25,000,000.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
2502(a) of such Code (relating computation of tax), 
after the application of subsection (g), is amended 
by adding at the end the following flush sentence: 
‘‘In computing the tentative tax under section 2001(c) for 
purposes of this subsection, ‘the last day of the calendar 
year in which the gift was made’ shall be substituted for 
‘the date of the decedent’s death’ each place it appears 
in such section.’’. 
(d) MODIFICATIONS OF ESTATE AND GIFT TAXES TO 
REFLECT DIFFERENCES IN UNIFIED CREDIT RESULTING 
FROM DIFFERENT TAX RATES.—
(1) ESTATE TAX.—
(A) IN GENERAL.—Section 2001(b)(2) of 
such Code (relating to computation of tax) is
amended by striking ‘‘if the provisions of sub-
section (c) (as in effect at the decedent’s 
death)’’ and inserting ‘‘if the modifications de-
scribed in subsection (g)’’. 
(B) MODIFICATIONS.—Section 2001 of 
such Code is amended by adding at the end the 
following new subsection: 
‘‘(g) MODIFICATIONS TO GIFT TAX PAYABLE TO RE-
FLECT DIFFERENT TAX RATES.—For purposes of apply-
ing subsection (b)(2) with respect to 1 or more gifts, the 
rates of tax under subsection (c) in effect at the decedent’s 
death shall, in lieu of the rates of tax in effect at the time 
of such gifts, be used both to compute—
‘‘(1) the tax imposed by chapter 12 with respect 
to such gifts, and 
‘‘(2) the credit allowed against such tax under 
section 2505, including in computing—
‘‘(A) the applicable credit amount under 
section 2505(a)(1), and 
‘‘(B) the sum of the amounts allowed as a 
credit for all preceding periods under section 
2505(a)(2). 
For purposes of paragraph (2)(A), the applicable 
credit amount for any calendar year before 1998 is 
the amount which would be determined under sec-
tion 2010(c) if the applicable exclusion amount were 
the dollar amount under section 6018(a)(1) for such 
year.’’. 
(2) GIFT TAX.—Section 2505(a) of such Code 
(relating to unified credit against gift tax), after the 
application of subsection (g), is amended by adding 
at the end the following new flush sentence: 
‘‘For purposes of applying paragraph (2) for any calendar 
year, the rates of tax used in computing the tax under 
section 2502(a)(2) for such calendar year shall, in lieu of 
the rates of tax in effect for preceding calendar periods, 
be used in determining the amounts allowable as a credit 
under this section for all preceding calendar periods.’’. 
(e) REPEAL
OF DEDUCTION
FOR STATE DEATH 
TAXES.—
(1) IN GENERAL.—Section 2058 of such Code 
(relating to State death taxes) is amended by adding 
at the end the following: 
‘‘(c) TERMINATION.—This section shall not apply to 
the estates of decedents dying after December 31, 2009.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
2106(a)(4) of such Code is amended by adding at 
the end the following new sentence: ‘‘This paragraph 
shall not apply to the estates of decedents dying 
after December 31, 2009.’’.
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying, gen-
eration-skipping transfers, and gifts made, after Decem-
ber 31, 2009. 
(g) ADDITIONAL MODIFICATIONS TO ESTATE TAX.—
(1) 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: 
(A) Subtitles A and E of title V. 
(B) Subsection (d), and so much of sub-
section (f)(3) as relates to subsection (d), of 
section 511. 
(C) 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. 
(2) SUNSET NOT TO APPLY TO TITLE V OF 
EGTRRA.—Section 901 of the Economic Growth and 
Tax Relief Reconciliation Act of 2001 shall not 
apply to title V of such Act. 
(3) REPEAL OF DEADWOOD.—