The House of Representatives voted last week to scale back the estate tax, after efforts for a full repeal were defeated in the Senate earlier this month.

The new bill, which passed 269 to 156, would make estates valued at less than $5 million (or $10 million for a couple) permanently exempt from taxation after 2010. Estates valued at up to $25 million would see their tax rate reduced to 15 percent. Estates of more than $25 million would be taxed at higher rates of 30 to 40 percent.

The bill will now go to the Senate for debate. Republican lawmakers are hoping that this revised version will attract the votes of Democrats who voted against the original bill for full repeal.

Estates valued at more than $2 million now are taxed at rates up to 46 percent. Under President Bush's tax cut plan, the estate tax will be slowly phased out by 2010. However, unless a new compromise is reached, the tax would return one year later.

-Tim Chan