President Biden expects to announce a 6 trillion dollar budget today and, if passed, it will potentially include the word “retroactive” as it relates to tax hikes.
It is a big deal and may significantly impact your taxes. The history of significant tax policies and tax hikes did not previously account for retroactive changes, except for in 1993.
Inside the American Families Plan, President Biden proposed increasing the top tax rate on capital gains to 43.4% from 23.8% for households with over $1 million. If it’s retroactive, tax hikes may be put into place as of April 28th, 2021, not allowing investors to sell their investments before the changes.
Just a few other things to look out for in the coming legislation:
- Corporate tax rates at 28%
- The top tax bracket increased to 39.6%
- Child Tax Credit increased and made permanent
- Capital Gains rate will increase to top income bracket of 39.6%
- Potential removal of real estate tax breaks, including 1031 exchange
- Increase in W-2 FICA taxes for individuals making over 400k
Also, note these changes may be retroactive for 2021.
Would you like to pay less on your taxes this year? If so, we are here to help you.
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