How Does Biden’s Tax Proposal Affect You? Part 1

by | May 24, 2021 | Home, Taxation, Videos

President Biden has proposed some new tax changes. How does this proposal affect you? We are breaking it down into 2 videos. In this video, we cover

  1. The “Stepped Up Basis”- the changed value of an inherited asset
  2. The “Gift and Estate” tax

Gift and Estate tax changes and the Step-Up Basis

Joe Biden has a tax proposal on the table right now. It is just a proposal, this isn’t law yet. We are looking at everything from gift to estate to corporate taxes and individual tax rates. So what does that mean for our investors and our clients, and how does it affect you?

Right now there’s so much going on, we wanted to put two videos together to discuss it and in this one we wanted to talk about the step-up basis upon people passing away. We also wanted to touch on the proposed changes to gift and estate tax.

Step-Up Basis: Proposed Changes

The big potential change that affects most people is called the step-up or step-to basis. This is when someone passes away and they pass their assets to their kids, they get a step-up in basis where whatever the assets were on the date of death is the value they inherit it at. If they choose to turn around and sell it there is potential for very little capital gains. The Biden administration might be getting rid of that one, which is something that affects a lot of our clients, as well as a lot of other people out there.

Gift and Estate Tax: Proposed Changes

Of course there are also changes to the estate tax, or what we call exemption equivalent. The amount you can inherit without paying taxes on it is around 11.5 million per person right now and is being proposed to go to as low as 3 million. The same thing is proposed with gift tax. Gifts over a million dollars in a given year might have a much different tax consequence than in years past.

If any of this resonates with you we are here to help. We walk through this with individual clients frequently and are open for consultation.

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