The Good, The Bad, and The Ugly of Projected Tax Implications
Podcast Episode – Tammira Philippe
Future Equity Returns
Matt Hall Recognized for Thought Leadership
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Category: Planning
The Good, The Bad, and The Ugly of Projected Tax Implications
There has been a lot of talk about the House Ways and Means Committee’s tax proposal. Whether in The Wall Street Journal or from Take the Long View podcast guest, John Jennings’ break down of the good, the bad, and the ugly, speculation is all over the place. As a client of Hill Investment Group, you can rest assured that we are planning for all of the potential iterations.
Below we’ve reviewed the most relevant points for our clients. Have questions? Feel free to reach out to us to discuss how the potential changes may affect you. Set up a time to talk here.
| House Ways and Means Tax Proposals | Current Law | |
| Top Income Tax Bracket | Increase the top individual income tax bracket to 39.6 percent. This new top bracket would start at taxable income levels of $400,000 for single filers, $450,000 for joint filers. Effective 1/1/2022. | The current top tax rate is 37 percent on taxable income over $523,600 for single filers and $628,300 for joint filers. |
| Capital Gains | Increase the statutory capital gains rate to 25 percent. Effective 9/13/2021, subject to a binding contract exception. | The current top statutory capital gains rate is 20 percent. |
| Estate and Gift Tax | Reduce to an inflation-adjusted $5 million. Effective 1/1/2022. | Inflation-adjusted $10 million ($11.7 million in 2021). |
| Roth Conversion | Eliminate Roth conversions for both IRAs and employer-sponsored plans for single filers with taxable income over $400,000 and joint filers with taxable income over $450,000. | A person can convert their eligible IRA assets to a Roth IRA regardless of income. |
Have questions? Feel free to reach out to us to discuss how the potential changes may affect you. Set up a time to talk here.
Is Financial Infidelity a Strategy?
“What’s clear… is that competing ways of spending—where one partner spends freely and the other doesn’t spend freely enough—can lead to serious conflict.” Hal Hershfield
At HIG, a considerable part of our job is helping couples discuss their finances openly and create their family’s plan together. Sounds simple – but we have seen the benefits firsthand. Our clients say having a third party help navigate this tricky topic can have a massive impact on their self-reported relationship satisfaction, as well as the likelihood of achieving their financial goals.
If you’re curious how you can level up your financial harmony at home, check out this piece by Hal Hershfield, courtesy of our friends at Avantis (an evidence-based mutual fund and ETF investment firm). Hal is a Professor of Marketing and Behavioral Decision Making at UCLA’s Anderson School.
Three Musicians and a Shoe Guy Walk Into a Bar…
What do Britney Spears, Michael Jackson, Prince, and Tony Hsieh (Zappos!) all have in common? And no – this is not the start of a bad joke.
Each of these individuals caught our attention recently for the headlines they (or their estates) made. While we usually encourage you to “tune out the noise” and “ignore the talking heads,” sometimes celebrity gossip headlines contain valuable lessons…usually of what not to do.
The combined estates of Spears, Jackson, Prince, and Hsieh are worth nearly $2 billion. An amazing sum! Yet all of this money is trapped in battles (legal or otherwise) to distribute or manage assets. Our crew of celebs could have avoided this pain. Unfortunately, when a clear plan is not in place, unwinding disputed estates can involve paying lots of pernicious fees. A reliable team of fiduciary advisors and a solid, up-to-date plan can minimize disputes, ease the process, and reduce unnecessary costs to the estate.
If my goal is to preserve assets for my beneficiaries or charitable causes, instead of getting stuck in a prolonged legal battle, what should I do?
It’s dramatically easier, less expensive, and simpler to pay your advisory team in advance rather than have them clean up the mess afterward.
That’s why Hill gets involved, sooner rather than later, in estate planning with our clients. Whether you’re just starting or need a comprehensive review and update of an existing plan, set up a call or meeting with us – click here. Your future self, and your kids, will thank you.
