TCJA Expiration - Time to Plan
Greetings!
The Tax Cuts and Jobs Act of 2017 will sunset at the end of 2025. When it was enacted, it was meant to boost the economy, but it couldn’t be held for the long term due to how badly it would affect the deficit. So, they ensured the Act would expire automatically. It will take government agreement and action to do something about it.
How will this affect you?
Well, it all depends on what the government decides to do with the exemptions and tax reductions before December 31, 2025. While there are corporate and business owner tax changes to consider in that Act, let’s keep our focus on individual families. First, income tax levels are set to move back up. Second, estate tax exemptions will be cut in half.
Now, the procrastinator gremlins may be trying to convince you that we should just wait and see what happens. Let’s see who gets elected or wait until they start really talking about what they’ll do with the Act. The problem with that strategy is that methods to combat potentially higher taxes can take a while to implement fully.
Depending on your tax bracket, you may want to take advantage of the slightly lower income taxes now.
Also, depending on your total estate value and how much you or your spouse have gifted, you may want to set up some gifting strategies or specialized trusts. Those strategies could protect your assets from estate taxes down the road.
Ultimately, much depends on your situation.
If you haven’t created a thorough plan yet, let’s talk. My team and I can help you devise a plan and get it operating. We definitely don’t want you to wait until it’s too late to take advantage of all the strategies, and you’re forced to hope the drama in D.C. works in your favor.
Sincerely,
David M. Gallagher
Wealth Manager
