Tip for Investors: Considerations for Investment Planning

As we continue to make our way through 2021, it is important to be aware of some potential upcoming changes that could impact your taxes and overall returns in the long run. To this point, the new administration and Congress have been focused on additional stimulus and spending. Now they reportedly are turning their attention to some potential tax changes. Some will apply to everyone, while some will only apply to those earning over certain thresholds.

We do not have specific details of what the proposed changes will look like, but we are starting to get some ideas based on recent comments. One area of likely change is the income tax rate, which could be increased for high earners. We also could see a change with capital gains taxes. Currently, long-term capital gains are taxed at a lower rate, but there is talk of starting to tax them at ordinary income tax rates (which often are higher). A final change to note is regarding estate taxes and the exemption amount. Congress may significantly lower the exemption amount, which would increase the number of taxable estates, and also raise the estate tax rate. These are some important items to monitor, and should these changes come to fruition, some considerable tax and estate planning could be necessary.

David M. Foreman, CFP^®

Member, Senior Client Consultant

David Foreman is a Senior Client Consultant for Waverly Advisors. He is also a Member of Waverly Advisors. With nearly fifteen years of experience, David’s primary responsibility is advising high net worth clients regarding various financial matters, such as retirement planning and investment management. He works closely with clients to identify their goals and develop a comprehensive plan to achieve them. He also has led the financial planning team as they provide comprehensive financial plans for clients. David and his wife live in Hoover, Alabama with their three children.

Disclosure