(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
SEC. 2. ACCELERATION OF INCREASE IN UNIFIED CREDIT. 
(a) IN GENERAL.—Subsection (c) of section 2010 
(relating to unified credit against 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. For purposes of the preceding sentence, the 
applicable exclusion amount is $3,500,000. 
‘‘(2) COST-OF-LIVING
ADJUSTMENT.—In the 
case of any decedent dying in a calendar year after 
2008, the $3,500,000 amount in paragraph (1) shall 
be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
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‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2006’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
If any amount as adjusted under the preceding sen-
tence is not a multiple of $1,000, such amount shall 
be rounded to the nearest multiple of $1,000.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to estates of decedents dying, and 
gifts made, after December 31, 2007. 
SEC. 3. ACCELERATION OF REDUCTION IN MAXIMUM ES-
TATE TAX RATE. 
(a) MAXIMUM ESTATE TAX RATE.— 
(1) The table contained in paragraph (1) of sec-
tion 2001(c) is amended by striking the 2 highest 
brackets. 
(2) Section 2001(c), as amended by paragraph 
(1), is amended by striking ‘‘(1) IN GENERAL.—’’ 
and by striking paragraph (2). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying, and 
gifts made, after December 31, 2007. 
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SEC. 4. RESTORATION OF, AND INCREASE IN, DEDUCTION 
FOR FAMILY-OWNED BUSINESS INTERESTS. 
(a) RESTORATION.—Subsection (j) of section 2057 
(relating to termination) is amended to read as follows: 
‘‘(j) APPLICATION OF SECTION.—This section— 
‘‘(1) shall not apply to estates of decedents 
dying after December 31, 2003, and before January 
1, 2008, but 
‘‘(2) shall apply to estates of decedents dying 
after December 31, 2007.’’. 
(b) INCREASE.— 
(1) IN
GENERAL.—Subsection (a) of section 
2057 is amended— 
(A) by striking ‘‘$675,000’’ in paragraph 
(2) and inserting ‘‘$8,000,000’’, and 
(B) by striking paragraph (3). 
(2) COST-OF-LIVING ADJUSTMENT.—Subsection 
(a) of section 2057 is amended by adding at the end 
the following new paragraph: 
‘‘(3) COST-OF-LIVING
ADJUSTMENT.—In the 
case of any decedent dying in a calendar year after 
2008, the $8,000,000 amount in paragraph (2) shall 
be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
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year by substituting ‘calendar year 2006’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
If any amount as adjusted under the preceding sen-
tence is not a multiple of $10,000, such amount 
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 after 
December 31, 2007. 
SEC. 5. ACCELERATION OF REPEAL OF TAX ON GENERA-
TION-SKIPPING TRANSFERS. 
Section 2664 (relating to termination) is amended by 
striking ‘‘December 31, 2009’’ and inserting ‘‘December 
31, 2007’’. 
SEC. 6. EXCLUSION FROM GROSS ESTATE OF VALUE OF 
PRINCIPAL RESIDENCE. 
(a) IN GENERAL.—Subchapter A of chapter 11 is 
amended by adding at the end the following new section: 
‘‘SEC. 2059. PRINCIPAL RESIDENCE. 
‘‘(a) IN GENERAL.—For purposes of the tax imposed 
by section 2001, in the case of a decedent who was (at 
the date of the decedent’s death) a citizen or resident of 
the United States, the value of the taxable estate shall 
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be determined by deducting from the value of the gross 
estate the adjusted value of any residence if— 
‘‘(1) such residence is included in determining 
the value of the gross estate, 
‘‘(2) such residence is located in the United 
States, and 
‘‘(3) during the 8-year period ending on the 
date of the decedent’s death, there have been periods 
aggregating 5 years during which such residence was 
owned by the decedent or a member of the dece-
dent’s family and used by the decedent or such a 
member as their principal residence (within the 
meaning of section 121). 
‘‘(b) LIMITATION.— 
‘‘(1) IN GENERAL.—The deduction allowed by 
this section shall not exceed $2,000,000. 
‘‘(2) COST-OF-LIVING
ADJUSTMENT.—In the 
case of any decedent dying in a calendar year after 
2008, the $2,000,000 amount in paragraph (1) shall 
be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2006’ for 
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‘calendar year 1992’ in subparagraph (B) 
thereof. 
If any amount as adjusted under the preceding sen-
tence is not a multiple of $1,000, such amount shall 
be rounded to the nearest multiple of $1,000. 
‘‘(c) ADJUSTED VALUE.—For purposes of this sec-
tion, the adjusted value of property is the value of such 
property for purposes of this chapter, reduced by amounts 
allowable as a deduction in respect to such property under 
paragraph (4) of section 2053(a). 
‘‘(d) QUALIFIED HEIR; MEMBER OF THE FAMILY.— 
For purposes of this section, the terms ‘qualified heir’ and 
‘member of the family’ have the respective meanings given 
to such terms by section 2032A(e).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subchapter A of chapter 11 is amended by adding at 
the end the following new item: 
‘‘Sec. 2059. Principal residence.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to estates of decedents dying after 
December 31, 2007. 
Æ 
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