NOTE: This is information is for educational purposes only. These proposed changes are not final, and not intended to be advice.
Corporate Tax Rate Increase
- The Corporate Rate increased up to 26.5% (graduated rate) for income over $5 Million
Personal Income Tax Increase
- 37% Marginal Bracket replaced with 39.6% Marginal Bracket
- Applies to income over $400,000 (Single) or $450,000 (Married Filing Jointly)
Capital Gains Tax Increase
- Top Rate increased from 20% to 25%
- Applies to income over $400,000 (Single) or $450,000 (Married Filing Jointly)
- Effective September 14, 2021 and after
Estate Tax Lifetime Exemption Reduced
- The Lifetime Gift Tax Exemption reduced to pre-2018 Tax Reform levels (The Tax Cuts & Jobs Act of 2017)
- Reduced back to $5 Million (indexed from 2018) per individual
- Effective after December 31, 2021
Cryptocurrency
- The Wash Sale Rule will apply to cryptocurrency trading
- Less incentive to sell during a loss for potential tax benefits
- Potentially, would reduce volatility in the crypto-markets
High Income Tax (Surtax)
- 3% additional tax on MAGI over $5 Million
- Applies to income over $5 Million (Single or Married Filing Jointly)
- Effective after December 31, 2021
Limitations on IRA Contributions
- No IRA or Roth Contributions allowed for taxpayers with:
- $10 Million of Assets in IRA, Roth, and/or Defined Contribution Plans; and
- Income over $400,000 (Single) or $450,000 (Married Filing Jointly)
Additional RMD Requirements
- Applies to taxpayers subject to RMDs with:
- $10 Million of Assets in IRA, Roth, and/or Defined Contribution Plans; and
- Income over $400,000 (Single) or $450,000 (Married Filing Jointly)
- In addition to regular RMDs, certain taxpayers will be subject to additional withdrawal requirements:
- 50% of the value over $10 Million
- If tax-deferred and Roth assets exceed $20 Million, then Roth RMDs must be withdrawn first
No More Roth Conversions
- Applies to taxpayers with income over $400,000 (Single) or $450,000 (Married Filing Jointly)
- Effective December 31, 2031
End of Backdoor Roth & Mega Backdoor Roth
- Applies to all taxpayers
- Eliminates the ability to convert after-tax balances and/or contributions to a Roth IRA or Roth 401(k)
- Effective December 31, 2021
NOTE: This is information is for educational purposes only. These proposed changes are not final, and not intended to be advice.
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