President Donald Trump’s newly-unveiled budget for 2021 would extend a slew of tax breaks enacted two years ago — but there’s little chance of the budget getting passed with the Democrats controlling the House of Representatives, according to news reports.
Under the proposal, the income and estate tax provisions of the Tax Cuts and Jobs Act would be extended beyond their scheduled 2025 expiration, CNBC.com writes.
That tax law, which went into effect in 2018, lowered the top income tax rate from 39.6% to 37% and increased standard deductions to $12,000 from $6,350 in 2017, the TV news channel’s website writes.
More importantly for financial advisors with wealthier clients, the new tax law doubled the estate and gift tax exemption to more than $11 million per person, according to CNBC.com.
An extension of the exemption to 2025, as envisioned in Trump’s proposed budget, would allow families more time to move their wealth and shrink their estates, Joseph Perry, CPA and national tax and business services leader at Marcum LLP, tells the website.
Trump’s budget proposal would also extend the tax break to pass-through entities, including S-corporations and LLCs, all of which became eligible in 2018 for a 20% qualified business income deduction, CNBC.com writes.
Other tax changes Trump’s new budget aims to extend include the doubling of the child tax credit to $2,000 per qualifying child under age 17 and making it available for joint filers with up to $400,000 ($200,000 for singles) in adjusted gross income — up from $110,000 ($75,000 for singles). It also gives a new $500 credit for “other dependents,” according to the website.
But experts say that Democratic control of the House means there’s no reason to change tax plans, CNBC.com writes.
“The long-term bet is that tax rates will go up, not down,” Howard Gleckman, senior fellow with the Urban-Brookings Tax Policy Center, tells the website. “If it were me, I wouldn’t be paying much attention to proposals to cut taxes.”
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