The latest edition of the Biden Tax Plan is out.
If you’re single and make under $400,000 or if your married and make under $450,000, then you can rest
easy. For the most part the proposal won’t affect you.
“Unfortunately,” the average household income for Financial Zen Members who are married with kids is
$455,000.
That means they will likely be affected by an increase in both income AND capital gains tax.
(Our “no kids” members are younger, single and make $297k on average. So if that’s you, you should be
okay.)
For income taxes, the proposal brings back the 39.6% top tax bracket and it shrinks the thresholds for the
32% and 35% brackets.
That means it’ll be easier to “accidentally” sneak into those brackets.
Capital gains will also increase from 20% to 25% for households over those income limits.
That means if you’re de-risking your company stock by selling, you’ll need to be careful.
(For what it’s worth the original plan was a 39.6% capital gains rate, so I suppose this would be a “win”.)
The other big change would be eliminating the “Backdoor Roth”.
As you know from previous posts, I’m NOT a fan of these for people in these income brackets, so it’s
pretty much a non-event.
(That said, I’m sure the media will make a big deal about it.) There’s a lot of other changes, but these are
the main ones that will affect our Financial Zen Community.
And keep in mind, nothing has been written into law yet, so more changes are possible. I’ll keep you
posted!
Tomorrow I’ll tell you what to do before the end of the year to OPTMIZE for the potential changes.
