Proposed Tax Increases on the Horizon

President Biden presented the American Families Plan in an April 28, 2021 address to Congress, which he proposed a federal spending program to support new educational and family programs.

The plan contains a number of proposals, some of which include tax increases for individual taxpayers with annual income greater than $452,700 (married couples filing jointly with incomes greater than $509,300). In an effort to help fund a $2.3 trillion infrastructure package and new social safety net programs, the plan also highlights two key tax hikes on the wealthy: a raise to the top income bracket from 37 percent to 39.6 percent, and an increase to taxes on capital gains for taxpayers earning more than $1 million. There are also additional proposed changes to estate taxation as well as other areas of the tax law, all of which may lead to planning opportunities if enacted.

Presumably, the proposed federal spending program would be combined with the tax changes in the Made in America Tax Plan, a proposed plan that would increase the corporate income tax rate from 21% to 28% to help offset an increase in infrastructure investment costs proposed in the American Jobs Plan.

Approval from Congress is needed for any of these proposals to take effect, and it is expected that details are likely to change as the legislation makes its way through the Capitol building. As always, BPW is monitoring all developments related to changes in tax law. When specifics of any new tax changes are unveiled, we will promptly equip you with strategies, tactics, and guidance to address those changes.

As your trusted advisor, we know that each client’s situation and financial goals are unique. Should you wish to consider options in anticipation of the proposed tax increase, please contact us for personalized guidance at (805) 963-7811.