Potential Estate Tax Changes in a Biden Administration
Any time a new president takes office and a new congress takes shape, there are questions about what that could mean for the United States tax code and other types of legislation. As American politics become more polarized, tax policy becomes more dynamic, changing with the political party that holds power.
Now, at the beginning of a Joe Biden presidential administration, this makes it a bit difficult to predict what will happen with tax policy moving forward considering the number of policies that may take precedent; such as the pandemic, high unemployment rates and the vaccine rollout.
When will changes happen?
It may be some time before any massive tax changes occur, simply because of the pandemic. However, if the pandemic appears to look better by the end of the summer, that could mean taxes become a focus in the fall.
Biden has previously talked about modifying estate taxes in a pretty substantial manner, including the modification of the step-up in basis rule. A step-up in basis is the readjustment of the value of an appreciated asset that is inherited from a deceased person. The beneficiary of the appreciated asset receives a step-up in income tax basis, avoiding potential large capital gains taxes. For decades, assets have been valued at the time of the owner’s death. If an asset was purchased for $100 and is later valued at $1,000 at the time of death, the basis in value would be $1,000; thereby, avoiding a capital gains tax on the $900 appreciation in value.
Of course, there are advantages and disadvantages to changing the estate tax structure, regardless of the valuation of an individual’s federal taxable estate. Therefore, it’s important to stay on top of changes to the tax code so you can plan accordingly.
For more information about potential tax changes in this new administration and how that may affect your estate planning, contact an experienced estate planning lawyer in Tampa at BaumannKangas Estate Law.