If enacted as-is, the tax reform proposals introduced by the Biden Administration and members of Congress could turn tax planning, as we know it, on its head.
- Corporate tax rates could increase from 21 percent to 28 percent
- The Section 199A qualified business income deduction may not be available for taxpayers earning in excess of $400,000
- Taxpayers whose income exceeds $1,000,000 could see their capital gains and dividend tax rates increase from 23.8 percent to 43.4 percent
- Individuals and joint filers earning more than $400,000 may have a top income tax bracket of 39.6 percent
- The carryover basis system could be replaced by a new "income tax at death” provision
- The current $11.7million estate/gift exemption could drop to $3.5 million and may no longer be indexed for inflation, while increased estate tax rates could range from 45 percent to 65 percent
- Grantor Retained Annuity Trusts (GRAT) could require a minimum 10-year term and valuation discounts for family owned businesses could be eliminated;
- The Generation Skipping Transfer (GST) tax exemption may be limited to qualifying trusts for a period not exceeding 50 years;
- Annual exclusion gifts could drop to $10,000/year and a new annual limit on the donor may not allow annual exclusion gifts to exceed twice this amount in any one year.
Here are ten steps to consider implementing:
The only thing certain in life is change. Which is why many of our clients choose to implement strategies that provide options to pivot when new lawmakers are at the helm. Is your strategy designed to withstand such changes? If you’re not sure, reach out to our team today to start a conversation on potential first steps.
Tax Laws subject to change. Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.