NEW YORK (CNNMoney.com) – Permanent repeal of the estate tax this year is looking highly unlikely given that the Senate defeated a motion to consider the legislation last week. But the chances for compromise weren't snuffed out, and estate tax reform legislation may still see the light of day.

"This won't be the last time this year the Senate votes on this important issue – be it on the floor or some other form," Senate Majority Leader Bill Frist (R-Tenn.), an advocate of permanent repeal, said in a statement after the vote last Thursday.

ESTATE TAX TODAY Through 2010, estate tax law becomes more lenient until it is fully repealed for one year. Then it reverts to pre-2001 law. Year  Amount exempt  Top rate on taxable portion  2006  $2 million  46%  2007  $2 million  45%  2008  $2 million  45%  2009  $3.5 million  45%  2010  Estate tax repealed for one year  N/A  2011  $1 million  55%

Fewer estates get hit Since 2000, the percentage of estates subject to the estate tax has been on the decline. Year  Amount exempt  Estates subject to estate tax  2000  $675,000  2.2%  2003  $1 million  1.3%  2006  $2 million  0.5%  2009  $3.5 million  0.3%   Source:  Center on Budget and Policy Priorities

The House of Representatives last year passed a bill calling for permanent repeal.

According to Congress Daily, a publication of the National Journal, Senate Republicans have some legislative options if they want to move on estate tax reform this year. They could, for instance:

• Attach estate tax reform to the conference report on pension reform, which is still being negotiated and to which a "trailer" bill of tax breaks is also expected to be attached.
• Ask the House to vote on a compromise proposal that they're confident would garner 60 votes in the Senate. That's the number of votes required to prevent filibuster.
• Amend the House's bill on permanent estate tax.
• Amend the House's bill on the alternative minimum tax.

If there is to be a compromise that garners 60 votes, both sides of the aisle will need to reach consensus on the amount of an estate exempt from tax and the level of the tax rates that apply to the taxable portion of an estate.

Many Republicans want a higher exemption level and tax rates no higher than 30 percent, well below the current rate of 46 percent, and almost half the 55 percent rate that will be reinstated in 2011 unless the law is changed.

One recent compromise proposal from the Republican camp comes from Sen. Jon Kyle (R-Arizona). His alternative proposal would exempt the first $5 million of an estate, up from the current $2 million exemption (or $4 million for couples). It would tax the amount between $5 million and $30 million at 15 percent and anything above $30 million at 30 percent.

Currently, estates that exceed the exemption level are taxed in a graduated manner with rates starting at 18 percent and rising to 46 percent.

Many Democrats may be amenable to raising the exemption level, but far fewer seem to be in favor reducing the tax rates, due to concern over how much revenue would be lost. The tax rate, not the exemption level, is what would cause the sharpest reductions in revenue, according to the liberal Center for Budget and Policy Priorities.

The latest proposed compromise comes from Sen. Tom Carper (D-Delaware). He offered an amendment to the repeal bill that would freeze the estate tax at 2009 levels: specifically, a $3.5 million exemption at a top rate of 45 percent.

The Urban-Brookings Tax Policy Center estimates that if the 2009 estate tax provisions were made permanent ($3.5 million exemption with a top rate of 45 percent) that would protect the smaller estates that otherwise would be subject to estate tax under pre-2001 law, and it would cost 60 percent less than permanent repeal.

If the estate tax were frozen at 2009 levels, only 0.3 percent of all estates would have any tax liability, according to CBPP.

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