Do you feel like you know enough about President Biden’s Tax proposal? As you probably know, President Biden has proposed numerous spending programs that would cost almost $2T and we also expect tax increases (likely later this year). Plain and simple, to meet the spending needs, tax revenue would need to be generated. As a result, the Biden Tax plan currently looks to raise taxes by $3.5T over a period of several years.
It is possible that President Biden will look to bring back the 39.6% tax rate on income over $400,000 and institute a payroll tax on those incomes. He will also look to increase the corporate income tax rate from 21% to 25-28%. His plan may also try to decrease the lifetime exemption from $11.58M to $3.5M (or $5M plus inflation).
Additionally, Biden has proposed a variety of new tax credits (or expansions to existing credits) to help increase after-tax incomes for low-earners. This new package is also expected to include checks for individuals and state and local aid. Biden’s onshoring plan increases the taxation of foreign profits while providing credits to incentivize economic activity that is onshored. According to Garrett Watson from the Tax Foundation, Biden’s plan would shrink the long-run size of the economy by 1.62% due to higher marginal tax rates on labor and capital (but a possible infrastructure bill could offset that).
The $1.9T Stimulus package passed its first test in the House with no Republican support. The Senate also adopted a budget resolution for Coronavirus relief, voting 51-50. Both actions set the stage for passing the stimulus bill using “budget reconciliation rules” to get around filibuster attempts by Republicans.
Over the last year, we experienced a global pandemic, an economy-shaking quarantine, a presidential election, and a cascade of legislation that impacted taxes and retirement planning. And it looks like that will be just the beginning. (Taxes matter now, more than ever.) We will continue to focus on Income Tax Planning, Retirement Planning, Retirement Distribution Planning, and Estate Planning/Transfers, and you should, too. And, don’t forget that if you have a large IRA you have even more to worry about due to the high taxes and the SECURE Act.
If you have any questions, please don’t hesitate to reach out. We are happy to help in any way we can.
CONQUERING TAXES IN 2021!
Federal Tax Filing Season Starts Soon
Resource Provided by Taylor Financial Group, LLC
The IRS has announced that the federal income tax filing season for tax year 2020 returns begins on Friday, February 12, 2021. Although tax seasons frequently begin in late January, the additional time will allow the IRS to update its programs and test its system to take into account any changes made by the Consolidated Appropriations Act, 2021 (CAA 2021), signed into law on December 27, 2020. Last-minute changes to the tax law have already been included in IRS tax forms and instructions…Read More
2021 Tax-Planning Checklist
Resource Provided by Taylor Financial Group, LLC
While you’re packing up the last of 2020, you’ll want to take advantage of the tax opportunities even a year like this one has to offer. Instead of dropping off a shoebox of receipts and hoping for a return, be intentional about maximizing returns and protecting income…Read More
Tax Changes and Key Amounts for the 2020 Tax Year
Kiplingers Article Provided by Taylor Financial Group, LLC
We were expecting 2020 to be a quiet year in terms of tax law changes. But, boy, were we ever wrong! The government funding bills signed by President Trump in December 2019 included a lot of tax provisions. The economic stimulus packages enacted in March and December 2020 to help boost the U.S. economy dragged down by the coronavirus added more….Read More
HEALTH AND WELLNESS
The Coronavirus Crossroads: the Vaccinated, the Stymied and the Waiting
The New York Times Article Provided by Taylor Financial Group, LLC
The economy is recovering. Markets came back pretty quickly and some jobs have returned, even though unemployment remains high. The government also provided some quick economic assistance with the CARES Act, but the election derailed efforts to provide more. Now, the second wave is upon us. While big strides are being made on a COVID-19 vaccine, the likelihood of it being widely distributed in the next few months is slim…Read More
Demand for Covid-19 Vaccines Overwhelms State Health Providers
The Wall Street Journal Article provided by Taylor Financial Group, LLC
Federal guidance to rapidly expand eligibility for Covid-19 vaccines has caused skyrocketing demand in some states, overwhelming local providers and frustrating people seeking shots. In Pennsylvania, vaccine demand has local health offices contending with crashed appointment systems and flooded phone lines. In Maryland, some counties and providers struggle to handle newly authorized groups….Read More
ARE YOU AND YOUR SPOUSE AWARE OF THE POTENTIAL TAX PLANNING OPPORTUNTIES FOR 2021?
2.10 Client Announcement Provided by Taylor Financial Group, LLC
In our continual efforts to provide you with the best possible service, we have identified a potential tax savings opportunity regarding the transfer of unrealized gains & losses between spouses who have different life expectancies (older husband and younger wife, or if one spouse has a life-threatening condition or anticipates a shorter life span)… Read More