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Tax Changes: Where Do We Stand Right Now?

As of the time of this post, there is still no deal on President Biden’s Build Back Better program. However, it is possible a vote may take place in Congress today to move the legislation along to the Senate. While the proposed bill is changing every day, it appears that a lot of the estate and trust planning changes to tax law have been dropped. (In the most current draft, there are no changes to valuation discounts, no changes to estate tax and generation-skipping tax exemptions, nor to the estate inclusion of grantor trusts or the treatment of sales and exchanges inside a grantor trust.)

The current emphasis is on increasing certain taxes on high-income individuals to include increased income taxes and fiduciary income taxes with surtaxes starting in 2022 - 5% on the adjusted gross income of an individual that exceeds $10 million and an additional surtax of 3% on an individual’s income that exceeds $25 million. The 5% tax would apply to income on a trust or estate above $200,000 and the 3% surtax to income of a trust or estate above $500,000. If this remains in the bill, it will emphasize the importance of income tax planning.

What will happen is anyone’s guess. While we are hopeful that many transfer tax techniques will be unaffected, as estate planners, we will be keeping our radar on the possibilities that change could come any day. If you have any questions regarding these estate issues, please call contact us. There is still time to address concerns before the end of the year!

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