It’s everyone’s favorite topic! Most likely to complain about, that is.
Some people look at taxes as a necessary evil. Others view it as a civic duty. No matter where you stand, it’s safe to say that it’s one of the highest “fees” you’ll pay throughout your lifetime.
Political views aside, we all need to ask ourselves if we can expect taxes to remain the same in the future. The answer is probably not. Uncle Sam has massive bills to repay, including pandemic-related stimulus packages. Keep in mind that the federal debt was already at an all-time high before COVID-19 hit.
Current income tax rates are pretty low. The Tax Cuts and Jobs Act of 2017 ushered in several changes to the individual income tax. For instance, the 25% income bracket went down to 22%, while the 15% bracket reduced to 12%. The estate, gift and generation skipping tax exemptions increased significantly. But like all good things, these favorable conditions will likely come to an end. Today’s tax sale is set to sunset December 31, 2025.
So, why take advantage of current rates? Take a look at the following bar chart highlighting the history of the highest marginal personal income tax rates.* During times of war and economic crisis, the highest marginal income tax brackets increase to staggering heights.
Help clients make smart tax moves
Our mighty Sales Development Advisor team is obsessed with helping advisors craft proven tax-advantaged strategies. These solutions have the potential to save clients tens of thousands of dollars in taxes every year. Call us now to learn how we can help you start the conversation and solve for a potential “taxmegeddon.”**
*Tax Policy Center, Urban Institute & Brookings Institution, February 4, 2020. https://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates
**Bill Bischoff, MarketWatch, January 2, 2020. https://www.marketwatch.com/story/how-to-protect-yourself-from-possible-taxmageddon-if-tax-rates-go-up-in-2020-2019-12-23
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