Recently, President Biden unveiled his 2024 Green Book tax proposals, which detail a number of potential changes to the US tax code. If these proposals become law, they could have a significant impact on taxpayers’ finances. Here’s what you should know about the potential changes and how they could affect your bottom line.
1. Higher taxes for high earners
One of the most significant proposed changes is an increase in taxes for high earners. Under the proposal, the top individual income tax rate would increase from 37% to 39.6%, and the top capital gains tax rate would increase from 20% to 39.6% for households earning more than $1 million per year.
If you fall into this category, you could see a significant increase in your tax bill. It’s important to note, however, that these changes are not yet set in stone and may be subject to negotiation and modification before they become law.
2. Changes to estate taxes
The Biden administration has also proposed changes to the estate tax. Under the proposal, the estate tax exemption would be reduced from its current level of $11.7 million to $3.5 million, and the top estate tax rate would increase from 40% to 45%.
If you have significant assets that you plan to leave to your heirs, these changes could impact your estate planning strategy. It may be worth consulting with a financial advisor or estate planning attorney to determine the best course of action.
3. Changes to business taxes
The Green Book proposals also include a number of changes to business taxes. These include a proposal to increase the corporate tax rate from 21% to 28%, as well as changes to international tax rules and new taxes on book income for certain large corporations.
If you own a business, these changes could have a significant impact on your bottom line. It may be worth consulting with a tax professional to determine how the proposed changes could affect your business and what steps you can take to prepare.
4. Potential tax credits for families
While many of the proposed changes could result in higher taxes for some taxpayers, there are also proposals for new tax credits that could benefit families. For example, the Green Book proposes expanding the child tax credit and making it permanent, as well as introducing a new credit for childcare expenses.
If you have children or are planning to have children, these credits could help offset the impact of higher taxes elsewhere. It’s important to note, however, that these proposals are not yet law and could be subject to change.
Overall, the Biden administration’s proposed tax changes could have a significant impact on taxpayers’ finances. It’s important to stay informed about these proposals as they develop and to consult with a financial advisor or tax professional to determine the best course of action for your individual situation.