I am not a tax professional, but I partner with the best in the business including the former Director of the Internal Revenue Service Gift and Estate Tax Division who wrote the code that enables us to legally and efficiently mitigate taxes wherever possible in our clients’ portfolios. He, and his staff, along with our other expert Estate Planning Attorneys have been trying to get the education out to the public about what is coming. It amazes me how I get the deer- in- the- headlight look when I talk with people about the looming tax changes and how it may affect them.
Just to give a little background, when President Trump was in office, he implemented The 2017 Tax Cuts and Jobs Act. This was the largest overhaul of the tax code in nearly three decades. This law created a single corporate tax rate of 21% which was one of the factors in job growth and economic favor during his term. Another element of the reform benefited individuals and families by placing them into lower tax brackets and therefore providing more money in their pockets. (H&R Block reported the average tax cut was around $1200 based on their 2018 returns.) Whether you agreed with these cuts or not, many were impacted with a positive net gain to their bottom line. But as the saying goes: all good things must come to an end. This bill is set to expire in 2025. The brackets will revert back to pre 2017 legislation.
So, what happens at the end of 2025? Depending on what tax bracket you are in this year, some more than others-- will be drastically impacted. Surprisingly, in my work, when I am talking with clients, they are unaware of this coming change and how it will affect their lives. Add to that, that we are living in a very precarious time economically with extremely high inflation, crazy-high gas prices, forecasted food shortages, and the stock market hopping around like the Eveready™️ bunny! Perhaps even worse, we are indirectly or perhaps more directly than we’d like-- involved in the war between Ukraine and Russia. I pray for the most positive possible outcome and no more death!
It’s impossible not to digress or feel emotional right now if you’re tuned into the world. Let me get back to my message for everyone who is a tax payer in the US. The following is the breakdown of how the various tax brackets will be impacted at the end of 2025:
I don’t know about most people, but if I’m in the 24% tax bracket and make $50,000 over $200,000, I will be financially devastated with a 9% tax increase on my income! So, to clarify here if I make $200,000, I’ll be in the 28% bracket, (which was previously 24%, beginning in 2017,) BUT, if I make $250,000, my bracket jumps to 33%. That’s 9 percentage points. Most people will not be able to afford this increase.
There is definitely hope. There are tax laws in place that allow you to shift assets and eliminate some taxation while at the same time allowing you to grow your money tax-free. We’ve been implementing this kind of solution for several years, and many agents and advisors are now getting on board with this strategy. There is still time to make changes and protect your assets and your family legacy. The best part is that the education we provide is free. Reach out to us for a chance to explore the various options that will best meet your needs. There’s never been a more important time to examine your current situation. I’m grateful every day for the opportunity to change people’s financial future for the best! It’s the reason I get up in the morning!
We will waive our fees for an analysis of the work you have already done for tax planning to see where our experts may be able to add additional value and further reduce tax exposure.
775-365-9429 We look forward to hearing from you!!
Comments