Every election has tax considerations. Perhaps the impact from this election will be even more significant than others as a result of the pandemic we are facing and all of the related economic uncertainty. While control of Congress is still undetermined, it is likely that Congress will be divided or at best ruled by the slimmest of margins making substantial changes more challenging and less likely.
It is likely there will be changes in addition to or as part of a quick stimulus package. We will monitor any revival of a stimulus package whether it is broad based or targeted towards those industries and taxpayers who need it most.
Here are a few additional thoughts to consider as we look to a new administration with new tax plans for 2021. Now is the time to start to plan for tax changes while there is still time to act in 2020.
The Biden campaign has proposed increasing ordinary income as well as capital gains rates. Additionally, they have proposed placing a 28% cap on itemized deductions, restoring the PEASE limit (phase out of itemized deductions for high income taxpayers) and repealing the SALT cap (which currently limits deductible state and local income and real estate taxes to $10,000).
Planning Considerations
Rising tax rates encourage accelerating income into lower tax years and deferring deductions into higher tax years. This is the opposite of typical tax planning aimed at deferring taxes.
The above tax planning considerations are key as we approach the end of 2020. Look for additional updates coming soon.
Please contact your Anchin Relationship Partner for additional information.