Significant Tax Law Changes Proposed

US Wealth Napolitano |

By: John P. Napolitano, CFP®, CPA, PFS, MST

Last month, several tax legislation changes were proposed that could have a significant impact on income tax and estate planning.  If enacted, some of these changes could take effect within the next few weeks with others taking effect in 2022.

You do not need to become a student of tax law or the proposed changes.  We are on top of this and will address the planning possibilities on your behalf for discussion in our next meeting.  If you have special circumstances or issues that you feel need addressing ASAP – please call ASAP! 

Our colleagues at Borchers Trust Law have summarized these changes in an article, which you can find on their website and by clicking here. Meanwhile, please take a look at the summary table that we have included, with some of the highlights for a quick read.

Topic

Current Legislation

Proposed New Legislation

Impact

Estate and Gift Tax exemption

$11.7M

$6M

Significant increase in taxes paid for estates over $6M

Estate Tax Rate

40%

40%

No change

Irrevocable Trusts

Used to receive gifts from estate, reduce estate and income taxes

Irrevocable trusts would be taxed at death, rather than viewed as gifts out of the estate

Significant death tax increase

Individual tax rate increase

37%

39.6%

 

A higher rate

Reduce highest income threshold for top tier tax rate

$628,000

$450,000

Higher rates apply to a lower income

Capital Gains Tax

20%

25%

A material increase

Corporate tax rate

21%

26.5%

Significant – expect companies to raise prices to offset this burden

Discounts on property valuations

Discounts allowed

Eliminated

Greater tax burden for gifts, related party sales and estates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John P. Napolitano CFP®, CPA is CEO of US Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investment advice offered through US Financial Advisors, a Registered Investment Advisor.