Other provisions in the measure maintain the so-called "step-up in basis" tax rules, which protect many heirs from paying additional capital gains taxes on inherited assets.

But the House action is unlikely to be repeated in the Senate, which is seen as likely to merely extend the current estate tax rate and deal with the issue as part of comprehensive tax reform legislation next year.

The bare-bones measure, however, fails to deal with other issues the insurance industry and small businesses want included in a final bill, such as indexing for inflation.

It also fails to include reunification of the estate and gift taxes and portability, which involves allowing the heirs of the second-to-die in a family to deduct both the husband and wife without the need to establish a trust.

The bill (H.R. 4154) was introduced by Rep. Earl Pomeroy, D-N.D.

"It is time to bring certainty to the estate tax so families across the country can properly plan for their estates," Rep. Pomeroy said during the debate on the measure.

"By making the 2009 estate tax level permanent we are addressing the uncertainty of not just next year, but of the years to follow," Congressman Pomeroy said.

"This bill provides the certainty families need to make long-term decisions and avoid the estate planning roller coaster that will result from current law," he said.

IIABA said it "applauded" Rep. Pomeroy and the House for its action, and called the bill a "step in the right direction," but said its members and their customers think that the threshold level should be higher and the other provisions included.

"The IIABA believes now is the time for Congress to significantly reform the estate tax to encourage investment and growth in small business," said Robert Rusbuldt, IIABA president and chief executive officer.

"This reform should come in the form of a decrease in the estate tax rate and/or increase in the exemption amount and should be indexed for inflation for the future," he added.

The IIABA supported an amendment added to the 2010 budget resolution that was passed by the Senate that included indexing, portability and reunification provisions.

That amendment, added by Sen. Blanche Lincoln, D-Ark., and Sen. Jon Kyl, R-Ariz, would have also raised the exemption level to $5 million person.

It passed the Senate by a 51-48, but did not survive conference committee discussions.

"The IIABA hopes the Senate will adopt the Lincoln/Kyl amendment and provide relief to family-owned small businesses across the country," Mr. Rusbuldt said.

"The estate tax disproportionately impacts small and family-owned businesses that serve local communities and fuel our economy," explained Charles Symington, IIABA senior vice president of government affairs.

"Without real permanent relief, family-owned small businesses are unable to plan ahead and make important business decisions," he added.

Mr. Symington explained that many of these businesses are asset-rich, yet lack liquidity to pay estate taxes when an owner passes away.

"There is evidence that the estate tax hinders the perpetuation of family-owned businesses because survivors are often forced to sell the business to pay their tax," Mr. Symington said.