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What’s in the Democrats’ Tax Plan?

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    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      • If tax-deferred and Roth assets exceed $20 Million, then Roth RMDs must be withdrawn first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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