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A Long Way From Becoming Law

By Mike Bischoff, CFP

With new tax proposals on the table in Washington, it may include the
following array of provisions:

 Paid family leave and medical leave
 New auto IRA program for small businesses
 Tax increases for high-income Americans
 Changes for Roth IRAs and conversion rules
 An increase to Capital Gain taxes for individuals

I’m not going to speculate on what all this means for future tax planning strategies but here are two ideas that make sense:

1. Roth Conversion in 2021 before tax rates increase
2. Consider a tax-deferred investment account if you are in the three highest federal tax brackets

The Ways and Means Committee discussions are a long way from becoming law and a senate bill may not include all the same tax provisions. The political balancing act continues to play out and it’s going to take longer than expected. This tax bill is still going through many changes. The bottom line is that the current period of low tax rates is coming to an end. We will have more information available in 2022. Changes always bring new opportunities for effective tax planning strategies.

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