Time to Meet With Your Advisor on Possible Tax Increases

June 2021 / 1 min read
Banner image

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.

Provision Current Law Proposal*
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
Carried interest 20% top rate taxed at long-term capital gains rates 39.6% top rate taxed as ordinary income
1031 exchanges 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.