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‘American Families Plan’ tax considerations

May 27, 2021 by The Trust Company of Tennessee

On April 28, the White House released the “American Families Plan.” While these changes are still speculative, we have the opportunity to plan ahead and better position ourselves for the tax changes that could be coming.

Top Individual Income Tax Rate

If you are in the top marginal tax bracket (not officially known, but perhaps anything above $452,700 for single filers and $509,300 for joint filers), you may consider taking some of the following actions:

  • Do a 2021 Roth conversion
  • Switch IRA/401(k) Roth contributions to pre-tax

Long-Term Capital Gains

To reduce capital gains taxes, consider:

  • Asset location
  • Taxable gains budget

Step-Up in Cost Basis at Death

Potential estate tax law changes make it especially important to consider these strategies:

  • Take gains before death
  • Review charitable giving plan
  • Revisit estate plan

At this time, proposed tax-changes are speculative. However, taxpayers who might be impacted by the proposed changes should start coordinating an action plan with their trusted team of advisors (accountant, estate planning attorney, financial advisor) to identify current or possible future planning opportunities.

We’re happy to get these conversations started now, so please reach out to your relationship manager or contact us to discuss how this affects you directly.

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