If you’re in the process of estate planning right now, you may be asking the question: what is the Biden tax agenda, and when, if passed, will it be implemented?
What is The Biden Tax Plan?
Let’s start with the basics: what is the Biden tax plan? To put it simply, the Biden Administration has previously suggested a decrease in the estate tax exemption allotted to an individual, from the current $11.7 million per person in 2021 under the Trump tax law to $3.5 million.
How Will This Impact Estate Planning if Implemented?
This proposed decrease in exemption amount has the potential of being coupled with an increased top tax rate of 45% to 55%. Additionally, there is a possibility that the Biden plan may repeal stepped-up cost basis on death. If implemented, this would result in a tax to unrealized capital gains when the assets are sold at possible increased capital gains tax rates. The stepped-up basis has historically been a benefit for taxpayers and a trade-off for the onerous estate tax.
How Likely Is It This Will Be Passed Into Law?
There is a strong possibility that some version of the Biden plan will be passed into law. We believe tis will be proposed prior to the mid-term elections in 2022. The effective date of the new policy is our next point of focus. Changes in estate and gift tax laws have not traditionally been effective retroactively. In other words, Congress has not in the past made the new law effective until at least the date it becomes law. However, some tax professionals believe that retroactive implementation is possible. Any retroactive implementation of the legislation would obviously impact affluent individuals who have not taken advantage of the increased exemption for 2021 before the new law becomes effective. Accordingly, taking action sooner rather than later seems prudent.
When To Seek Professional Counsel
As we all know, legislative negotiations are unpredictable. If you are considering altering or creating an estate plan in response to these potential changes, it is imperative to seek the counsel of an experienced estate planning professional. Schedule a consultation with Houser Firm today!
Need Help Navigating The Biden Tax Plan? Houser Firm in Dallas, TX and Surrounding Areas is Here to Help!
Contact us today to schedule a consultation with one of our lawyers at 972-777-3589 or visit us online for more information.