The Trump Tax Cuts Could Be Here To Stay—What It Means For Your Money | Global News Avenue

When President-elect Donald Trump hits the campaign trail, He agreed to extend Tax Cuts and Jobs Act (TCJA) 2017. With Republicans holding majorities in both the House and Senate, he can more easily deliver on that promise.

Some financial advisors are preparing clients for the possibility of an extension to the TCJA, which is set to expire at the end of 2025. TCJA imposes restrictions on income tax rates, estate tax exemptions, and State and local taxes (SALT) Deductions etc.

“I think it’s a relatively strong bet to extend the TCJA,” said former Intuit CEO Bill Harris. “It doesn’t change things, but it does remove concerns about a lot of other things happening. Worry.”

Income tax rates may remain unchanged

TCJA reduced marginal income tax rate Americans of nearly all income levels.

For example, before the TCJA, the marginal tax rate in the top tax bracket was over 39%. As a result of the TCJA, the top tax rate dropped to 37% and will likely remain at that level until 2026.

Mariana Gucciardi Certified Financial Planner (CFP) The Wealthmind Financial Planning woman noted that lower marginal tax rates benefit her clients’ cash flow and tax planning. However, she doesn’t recommend making financial decisions based solely on changes in marginal tax rates.

“If something is already in the plan for this year, I wouldn’t delay action just because the TCJA might be extended,” Gucciardi said. “For example, if tax rates are currently low and expected to remain low, completing a Roth conversion now could give you more time to benefit from tax-free growth.”

What will happen to the SALT deduction remains up in the air

For taxpayers who itemize rather than take the standard deduction, the SALT cap limits the amount of state and local taxes they can deduct from their income to $10,000. Before the TCJA, there was no cap.

Experts point out that high-income individuals, especially in high-tax states, were harmed by the SALT caps in the TCJA.

“Most of our clients tend to own large and expensive homes in states with higher income and property taxes, and they don’t fully benefit from being able to file their taxes,” said Malcolm Ethridge, CFP in Washington. Write off most properties at the time ” , DC.

On the campaign trail, Trump claimed he wanted to End of SALT deduction capbut doing so can be costly. The SALT cap deduction was originally intended to offset the costs of other provisions in the bill, and eliminating it would likely cause the budget deficit to swell.

Planning to leave a legacy? You should still create an estate plan

Thanks to the TCJA, the estate tax exemption has been doubled. Now, when individuals die, they can donate up to $13.6 million to their heirs without paying estate taxes of up to 40%.

Prior to the TCJA, the estate tax exemption limit was $5.49 million in 2017. If the TCJA expires, the tax exemption limit will revert to 2017 inflation-adjusted levels, which is approximately $7 million.

Although it is possible to increase estate tax exemption Although it will be extended, experts still recommend consulting with an estate attorney in the meantime.

“If the estate tax exemption goes away and you do nothing, your family is going to lose quite a bit of money because of a lack of planning,” said Dennis Huergo, vice president of Wealth Improvement Group.

Vergo also said deregulation could boost the stock market and lead to more people facing estate tax issues as Republicans score decisive electoral victories.

“Implementing estate freezing techniques early can prevent problems from getting worse over time,” he said.