Year-end financial planning: How to prepare for Biden’s proposed tax changes

by | Oct 8, 2021 | In The News

Published October 8, 2021 by Yahoo! News

Right now, President Biden’s new American Families Plan tax proposal is just that: a proposal.

But should it become the law of the land in its current form, there’s plenty of year-end financial and tax planning moves for taxpayers to consider now.

New top income tax rate. One provision would raise the top ordinary income tax rate bracket from 37% to 39.6%. Given that, higher earners should think about accelerating some of next year’s income into 2021 to avoid higher rates proposed for 2022, says Philip Herzberg, a lead financial adviser with Team Hewins. “The change would apply above proposed $450,000 of taxable income for joint filers and $400,000 for single filers, which are much lower than current top rate beginning at around $628,000 for couples filing jointly and $524,000 for single filers,” he says.