Please note that this blog is based on information known as of September 2020 and may not contain later amendments. Please contact Cray Kaiser for the most recent information.
As the November 2020 elections approach, you might want to know what the two front-running presidential candidates’ tax plans for the future are. The following is an overview of their positions, as we know and understand them today. However, the political and economic landscapes can and will change, and there is no assurance these plans won’t be revised or that they will have eventual Congressional backing. However, the information may be helpful as you look toward future tax planning.
Individual Tax Rates
Capital Gains Tax Rates
Basis Step Up on Inherited Property
Range from 10% to 37%. The top rate is scheduled to return to 39.6% in 2026.
Range from 0% to 20%; Collectibles top rate is 28%.
A beneficiary uses as their basis of an inherited asset the fair market value at the date of death. (Basis is the amount from which future gain or loss is determined.)
Generally, would continue with current rates by extending the Tax Cuts and Jobs Act past 2025. However, would lower the rate for middle class taxpayers, possibly by bringing the 22% rate down to 15%.
Would continue with current rates by extending the Tax Cuts and Jobs Act beyond 2025.
No proposed change.
Would return the top rate to the pre-tax reform 39.6% immediately (if approved by Congress).
Increase top rate to 39.6% for taxpayers with over $1 million of income.
Would eliminate the step up, either by taxing “paper gains” at death or assigning the decedent’s basis to the beneficiary (details not clear at this time).
Again, these plans are only proposals of what changes might happen based on the election results. It takes acts of Congress to move plans into law. With various scenarios in play, it might be wise to look at proactive tax planning to minimize future tax liability. Please feel free to contact Cray Kaiser to discuss your tax planning for next year.