Proposed capital gains tax increase. How to save on taxes
President Joe Biden addresses a joint session of Congress at the United States Capitol in Washington, DC, April 28, 2021.
Chip Somodevilla | AFP | Getty Images
The future of President Joe Biden’s proposal to increase capital gains for wealthier households is uncertain, but accountants are considering strategies to help ease the tax burden.
To help finance his $ 1.8 trillion plan for American families – a new stimulus proposal that In includes improved tax credits for families – Biden calls for higher levies on capital gains and high income earners.
He would like to reduce the top income tax rate from 37% to 39.6%.
In addition, Biden is proposing a hike in the long-term capital gain rate to 39.6%. Currently, the maximum rate of these gains is 20%. The increase would apply to households earning more than $ 1 million.
Accountants do not anticipate a wave of panic selling taxable accounts, but they say now is a good time to think about tax strategies.
“People hear a ‘tax rate hike’ and start doing things they wouldn’t do otherwise,” said Tim Steffen, CPA and senior education advisor at Pimco.
“Investment decisions are rarely based on a single factor,” he said. “Be sensitive, but not motivated by taxes.”
Here are four tax mitigation strategies to consider in an era of higher rates.