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Therapy For Your Money

Episode 21: What tax changes can you expect with the new administration?

February 19, 2021 Julie Herres Season 1 Episode 21
Therapy For Your Money
Episode 21: What tax changes can you expect with the new administration?
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Therapy For Your Money
Episode 21: What tax changes can you expect with the new administration?
Feb 19, 2021 Season 1 Episode 21
Julie Herres

2021 started off with an administration change, which (potentially) means new tax policies! While there haven't been any policies put into effect as of yet, we wanted to make sure our listeners are prepared for changes that may come. From estate tax, income tax, and more, we've got everything you need to know in this episode.

(As of recording & uploading in February 2021, none of these changes are official. These are changes we are anticipating based on the Biden administration's tax proposals. Some of these changes may be retroactive, and could be applied beginning in January 2021.)

Episode Highlights:

  • Capital Gains Tax Rates
    • There are currently three capital gain tax rates- 0%, 15%, and 20%. The new administration is considering increasing the capital gains rate for high income individuals making over $1,000,000/year.
  • Income Tax Rates
    • The U.S. has a progressive tax bracket, meaning we have brackets between 10% and 37%, so your income threshold will depend on your income as well as your filing status (single, head of household, etc.). One proposed change is to increase the top bracket to 39.6% or add a whole other tax bracket on top of the 37% bracket.
  • FICA - Social Security
    • When you have employees, the employer pays and the employee has withheld 6.2% of their wages. There is currently a cap at $137,700. The proposed tax plan would increase that cap to $400,000.
  • Pass Through Income
    • There are proposed changes for the QBI deduction. The Tax Cuts and Jobs Act of 2017 allows eligible self-employed and small-business owners to deduct up to 20% of their qualified business income on their taxes. Under the new administrations, the proposed change would phase out section 199A of the Tax Cuts and Jobs Act.
  • Estate Tax
    • Estate Tax in the United States is a tax on the transfer of the estate of a deceased person. As of now, current law has estate tax set at 40%, and the proposed changes would increase this to 45%. There are some exclusions to this, and the proposal would also reduce those exclusions. It is best to consult an estate attorney for these instances.

Links & Resources:
GreenOak Accounting
Therapy For Your Money Podcast

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Show Notes

2021 started off with an administration change, which (potentially) means new tax policies! While there haven't been any policies put into effect as of yet, we wanted to make sure our listeners are prepared for changes that may come. From estate tax, income tax, and more, we've got everything you need to know in this episode.

(As of recording & uploading in February 2021, none of these changes are official. These are changes we are anticipating based on the Biden administration's tax proposals. Some of these changes may be retroactive, and could be applied beginning in January 2021.)

Episode Highlights:

  • Capital Gains Tax Rates
    • There are currently three capital gain tax rates- 0%, 15%, and 20%. The new administration is considering increasing the capital gains rate for high income individuals making over $1,000,000/year.
  • Income Tax Rates
    • The U.S. has a progressive tax bracket, meaning we have brackets between 10% and 37%, so your income threshold will depend on your income as well as your filing status (single, head of household, etc.). One proposed change is to increase the top bracket to 39.6% or add a whole other tax bracket on top of the 37% bracket.
  • FICA - Social Security
    • When you have employees, the employer pays and the employee has withheld 6.2% of their wages. There is currently a cap at $137,700. The proposed tax plan would increase that cap to $400,000.
  • Pass Through Income
    • There are proposed changes for the QBI deduction. The Tax Cuts and Jobs Act of 2017 allows eligible self-employed and small-business owners to deduct up to 20% of their qualified business income on their taxes. Under the new administrations, the proposed change would phase out section 199A of the Tax Cuts and Jobs Act.
  • Estate Tax
    • Estate Tax in the United States is a tax on the transfer of the estate of a deceased person. As of now, current law has estate tax set at 40%, and the proposed changes would increase this to 45%. There are some exclusions to this, and the proposal would also reduce those exclusions. It is best to consult an estate attorney for these instances.

Links & Resources:
GreenOak Accounting
Therapy For Your Money Podcast