Under the 2001 Tax Act passed in June, 2001, as later extended, the death tax exemption amount increases as listed on the chart below.

Die in:Death Tax Free AmountGift Tax Free Amount
1997$600,000$600,000
1998$625,000$625,000
1999$650,000$650,000
2000
2001
$675,000$675,000
2002
2003
$1,000,000$1,000,000
2004
2005
$1,500,000$1,000,000
2006
2007
2008
$2,000,000$1,000,000
2009$3,500,000$1,000,000
2010NO TAX IF YOU DIE IN 2010
WATCH OUT FOR YOUR KIDS THIS YEAR
$1,000,000
2011$5,000,000$5,000,000
2012$5,120,000 (indexed for inflation)$5,120,000
2013
AND LATER
$5,250,000 (indexed for inflation) $5,250,000
 In 2013 we fell off the fiscal cliff (briefly), and then
the politicians fixed it.  The tax free amount is now
$5,000,000, indexed for inflation, permanently
(until they change it again).
 

Of course, a couple can double the tax free amount with a Living Trust.