With the possibility of tax increases on the wealthy to fund President Biden’s legislative proposals, now is a good time to meet with your William Blair advisor to discuss your individual or family wealth planning needs.
While it is unlikely that all the proposals would become law, the following chart highlights some of the possible changes in the American Families Plan that could most affect high-net-worth individuals.
|Individual income tax
||37% top rate
||39.6% top rate
|Long term capital gains & qualified dividends
||20% top rate (+3.8% net investment income tax)
||39.6% top rate (+3.8% net investment income tax rate) for those making over $1M
|Basis of assets at death
||Basis of assets is stepped-up to market value at death
||Elimination of step-up basis for gains over $1M; immediate taxation of appreciation at death; exceptions for family-owned businesses and farms
|Gifting of assets*
||Adjusted cost basis is carried over to recipient (assuming fair market value is higher than cost)
||Donor to realize a capital gain at the time of transfer
||20% top rate taxed at long-term capital gains rates
||39.6% top rate taxed as ordinary income
||Ability to defer unlimited capital gains tax on real estate exchanges
||1031 gain deferral capped at $500K
Source: American Families Plan
*U.S. Treasury proposal issued May 2021
To discuss wealth planning strategies, contact your William Blair wealth advisor or email PWM.
This information has been prepared solely for informational purposes and is not intended to provide or should not be relied upon for accounting, legal, tax, or investment advice. We recommend consulting your attorney, tax advisor, investment, or other professional advisor about your particular situation.