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2021-2022 Proposed Tax Changes

The Wiser team explains the new tax plan that has been proposed. Capital gains increase, income tax bracket changes, retroactive policies, and eliminating back-door Roths are a few of the highlights in this newly proposed tax plan. In this video we break down all the parts we think you need to know. Watch this video to find out if these tax changes could impact you!

Capital Gains – taxes are going up from 20% to 25%. This proposed to be retroactive. You will have to have had a sale done by September 13th, 2021 if the proposal is approved.

Income Tax – the highest bracket (39.6%) has moved down to $400,000 for single and $450,000 for married filing joint. This is a significant change. This income bracket it expected to be hit the hardest.

Back-Door Roths and Mega Back-Door Roths – this administration has proposed to get rid of them altogether. There would be a 10-year window encouraging taxpayers to convert to Roth accounts over that time.

If you have over 10M in a retirement account there will be a RMD of 50%, meaning you will be required to withdraw 50% of that money.

Grantor Trusts – they are typically used by wealthy individuals as estate planning tools. Right now they are saying that gains inside the trust must be taxed each year rather than being deferred to at passing in the estate planning. Defecting Grantor Trusts are effectively being eliminated.

S Corporation Owners – If your modified adjusted gross exceeds $400,000 for single or $500,000 for joint, you will be subjected to an additional 3.8% surtax on your income tax return.

The bill is highly targeted between the $400,000 and $500,000 income bracket.

If you'd like to learn more, here's an article explaining the tax plan further.

Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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Meet Daphne, our Financial Planning Intern. She is studying Finance at The University of Georgia. We are excited she's joined us for the summer!

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