1 February 2021
Here, we’re revisiting the Biden Tax Proposal, now that his administration takeover has been confirmed. How will it impact Capital Gains Tax, as well as Estate and Gift Tax.
If you’d like to read this later, you can download the PDF copy here:
Now that the US has a new president, there will inevitably be a lot of change for US citizens, both in the US and those living and working abroad.
With an evenly split senate, it may be easier for Biden to pass some of his proposed legislation that would have been impossible if there was a republican majority. Even a small majority in a vote can make life easier for him.
When reviewing the Biden taxes & policy change, two of the most pertinent changes could be those planned for Capital Gains Tax and Estate Planning.
Capital Gains Tax will change from a flat 20% to being taxed in line with income rates which are proposed to increase from 37% to 39.6% for the highest band (more than $400K).
It is unclear whether this increase in Capital Gains Tax includes the additional 3.8% tax applied to net investment income. If this is the case CGT could be as high as 43.4%.
However, there are some practical things you can do to reduce your Capital Gains Tax liabilities.
This can also mean anything bought more than a year ago can be considered long-term so ensure you check the trade date of the purchase to sell at the most beneficial time.
Biden Tax Policy: Estate and Gift Tax increase
The Estate and Gift Tax rate will possibly increase from 40%-45% and the tax exemption rate will decrease from $11.58m to $3.5m and $1m for lifetime gift tax exemption.
Essentially this restores the levels back to those of 2009. There are, however, some ways of taking advantage of the allowances to reduce the tax owed.
We’ve revisited Biden Taxes – so what next?
With the situation being so uncertain, it is likely you will be watching the development over the next few weeks with bated breath. Instead you could start the conversations and find out what your options are and how such changes could affect you.
If you think some of these tax changes could affect you, or you would like clarification, give us a call today and we will offer advice on what the best plan of action could be for you at this time.
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