Are you prepared for what we call the upcoming 2021 911 Tax Attack?
What's coming are landmark changes to the tax code and increases that will impact upper-middle-income and wealthy Americans unlike any we’ve seen in decades, possibly generations.
Below is a shortlist of proposed changes that will catch many unprepared Americans off guard.
First is an increased C-corp rate from 21% to 28%. If you remember, Trump cut these rates from 43% down to 21%. What we found as a result was that American companies that went overseas came back and paid tax. Total corporate tax revenues increased. No doubt this increase will be a step backwards and will result in more offshore exits, decreased American jobs, and a reduction in collections.
Second, we have an increase in the individual top tax marginal rate to 39.6% and the added payroll tax of 12.4% on earned income over $400,000.
Other key changes include:
Limitation of itemized deductions to 28% of AGI
Increased estate and gift tax rates (currently at 40%)
Decreased estate tax exemption to $3.5 million
Elimination of the section 199A 20% deduction for incomes over $400,000
Elimination of the step-up basis of inherited properties
Elimination of tax-exempt like-kind exchanges for real estate
If you have highly appreciated property, you need to plan now. Otherwise, you could end up paying more than twice what you would today on the sale of property.
We have an increase in the individual top tax marginal rate to 39.6% and the added payroll tax of 12.4% on earned income over $400,000.
For individuals making more than $250,000 per year and married couples earning more than $400,000, I cannot emphasize enough the importance of having a plan to control the impact of these changes. There's a lot that you can do to protect yourself. Don't wait until later in the year when it might be too late.