Most of us can’t wait for this nasty year to come to a close. As we look ahead to the New Year, however, it is important to remember that, given the results of the 2020 election, the Tax Cuts and Job Act of 2017 enacted by the Trump Administration will likely expire. This year, 2020, could be your final opportunity to take advantage of historic gifting exemptions and tax rates.
President-Elect Joe Biden has announced plans to undo some of the tax regulations introduced by the Trump Administration in the Tax Cuts and Job Acts of 2017. Of course, this depends on the cooperation of the Congress; however, it's crucial to be prepared. Some of the key points in Joe Biden’s proposed tax policy are the following:
A large amount of these taxes will come from wealthy individuals and businesses, especially those that hold capital gains on their investments. This could have a significant impact on your wealth as an individual or business. Those with a taxable income higher than $400,000 could see their income tax increase significantly, along with city and state taxes and the proposed escalation of the gift and estate tax.
Taxpayers with high incomes will see both an increase in their individual taxes and the gifts and estate tax exemptions returning to $3.5 million ($10 million per couple) as opposed to the current exemption rate of $11.5 million ($23 million per couple). If you plan on moving your assets to a trust, you must act quickly. Gifting must take place before January 2021!
Between now and the end of 2020, current tax law provides an incredible opportunity to transfer assets while minimizing losses. We may never see tax rates this low again! Please give us a call if you wish to discuss!