Category: Planning, Timely Topic
The Good, The Bad, and The Ugly of Projected Tax Implications
There has been a lot of talk about the House Ways and Means Committee’s tax proposal. Whether in The Wall Street Journal or from Take the Long View podcast guest, John Jennings’ break down of the good, the bad, and the ugly, speculation is all over the place. As a client of Hill Investment Group, you can rest assured that we are planning for all of the potential iterations.
Below we’ve reviewed the most relevant points for our clients. Have questions? Feel free to reach out to us to discuss how the potential changes may affect you. Set up a time to talk here.
| House Ways and Means Tax Proposals | Current Law | |
| Top Income Tax Bracket | Increase the top individual income tax bracket to 39.6 percent. This new top bracket would start at taxable income levels of $400,000 for single filers, $450,000 for joint filers. Effective 1/1/2022. | The current top tax rate is 37 percent on taxable income over $523,600 for single filers and $628,300 for joint filers. |
| Capital Gains | Increase the statutory capital gains rate to 25 percent. Effective 9/13/2021, subject to a binding contract exception. | The current top statutory capital gains rate is 20 percent. |
| Estate and Gift Tax | Reduce to an inflation-adjusted $5 million. Effective 1/1/2022. | Inflation-adjusted $10 million ($11.7 million in 2021). |
| Roth Conversion | Eliminate Roth conversions for both IRAs and employer-sponsored plans for single filers with taxable income over $400,000 and joint filers with taxable income over $450,000. | A person can convert their eligible IRA assets to a Roth IRA regardless of income. |
Have questions? Feel free to reach out to us to discuss how the potential changes may affect you. Set up a time to talk here.
