As the country moves forward from the effects of the Coronavirus and the 2020 elections, it is time to consider potential key tax law changes that may affect you in 2021 and beyond. Given the 2020 election results and the Tax Cuts and Jobs Act of 2017 (TCJA) sunset provisions (generally 12/31/2025) getting closer every year, many tax and fiscal issues remain uncertain. Today, it appears that tax legislation may be in the offing. In fact, President Biden’s infrastructure plan includes a 28% corporate tax rate among other corporate tax increases. In addition, Senator Sanders (I-VT) has introduced legislation to make the estate tax progressive, more on this later. No doubt, the ultimate make-up of the tax laws will depend on the direction taken by our nation’s leadership (including President Biden and Congress), either by their ability or inability to agree on tax and fiscal legislation.
The outlook for higher income, estate, gift and generation-skipping taxes
With a new President and Congress in 2021, there are many variables and hurdles to overcome regarding any legislation (including tax legislation). In general, as of today, nothing has changed regarding income, estate, gift, generation-skipping transfer, payroll, etc., taxes. When debating budgetary issues, Congress must address projected deficits, anticipated increases in infrastructure spending, projected increases in defense spending, proposed tax increases, funding Social Security and SSDI, funding Medicare, etc. These "new" or additional expenditures, combined with the more than $27 trillion of current National debt, should reinforce the need for you and your family to build absolute and significant flexibility into financial and estate planning scenarios. More importantly, you and your family should have a renewed focus on providing income and protecting family wealth for current and future generations.