October Tax Tips
Tax Planning Season!
It’s that time of the year. No, not Halloween or even Thanksgiving, It’s Tax planning season. In order to effectively plan both for this year and for future years it is important to know which tax laws may soon change. The Biden Administration has proposed several tax changes. As of now, nothing has passed. Even if changes do pass, they may be significantly different then the proposal. I have a summary of the tax changes below along with an attached article written by Michele P. Scott posted by Investopedia which discussed the Biden Administration’s proposed tax changes.
- The top individual federal income tax rate would rise from 37% to the pre-Trump rate of 39.6%.
- The corporate rate would rise from 21% to 28%; a 15% minimum tax would apply to corporate book income.
- American corporations’ foreign income generally would be subject to a tax of 21%.
- Taxpayers with incomes over $1 million would pay a tax of 43.4% on capital gains.
- An extension through 2025 is proposed for the 2021 increase in the fully refundable child tax credit from $2,000 per child to $3,600 for children under age 6 and $3,000 for children ages 6 through 17.
- Extensions beyond 2021 also are proposed for the increase in the maximum Child and Dependent Tax Credit from $3,000 to $8,000 ($16,000 for more than one dependent); the expansion of, and increase in, the earned income tax credit for younger workers; and the premium tax credits that reduce ACA health insurance premiums.
- The step-up in basis on death and carried interest loopholes would be eliminated.
- Caps would limit tax deferral for realty exchanges and deductions for excess business losses.
Here is a link to the full article on Proposed Biden Administration Tax Changes: https://www.investopedia.com/explaining-biden-s-tax-plan-5080766