The news of president Biden’s proposal to double the capital gains tax rate spooked the markets last week. An increase in capital gains tax is thought to slow down the appetite for people to invest. Capital gains tax changes weren’t the only component of Biden’s tax plans, as more details came out this week as part of his $1.8 Trillion “American Families Plan.”
There are some tax credits you may be able to take advantage of, but also some areas that will see an increase in taxes to pay for those credits.
Below is a checklist you can download to see if any of the proposed changes will impact you.
Here are some additional resources on the changes included in the proposal:
- One of the cornerstones of the American Families Plan is the extension of the new $3,000 child tax credit, although there is some debate on whether President Biden should make the credit permanent or last until 2025 as the plan calls for.
- If you’re married and earn over $500,000 combined, you would see your tax bracket increase. Our 2021 Key Financial Data Card lists the current tax brackets.
Historically, tax brackets have been all over the place. Here is an image that shows the highest tax bracket every year.
At first, it appeared that the capital gains increases would only impact a small subset of people — those earning more than $1 million. Here is a CNBC article that talks about how the capital gains tax may hit middle-class home sellers.
One thing noticeably missing from the American Families Plan: Student Loan Forgiveness.
The news of tax increases should not come by surprise. In January, our Wealth Manager and Founder Marc Bautis hosted a webinar that projected the possibility of tax increases in 2021 and explained what could be done to prepare. If you missed it, watch the on-demand replay here.
Remember: Before you take any action, talk to a financial professional. As of right now, this is only a proposal — and the likelihood of everything in the proposal being passed through Congress is small.