If the CARES Act did not add enough planning complexity to 2020, we now have a change in leadership at the presidential level.  With the recent election pegging Joe Biden as the next President, it is important to take a look at his legislative proposals and determine if there are any areas in which individuals should review their situation and make proactive moves.  While nothing is certain, especially with the Republicans holding the Senate, we recommend you review the following situations before the end of the year: 

Taking additional income in 2020 

If you are at the top tax bracket, Biden has recommended increasing the tax bracket to 39.6% for those making over $400k.  If you are in that situation, and you have control over timing of your income, you may want to consider moving some to this year. 

Also, if your income is over $1MM, Biden has proposed increasing capital gains to the top tax bracket which could be 39.6%.  With the additional NIIT, that would be a total rate of 43.4%.  It may make sense to realize some or all of your investment gains now. 

Utilizing your lifetime gifting exemption 

Each individual currently can gift up to $11.58MM, or $23.16MM per couple without paying gift tax or future inheritance tax.  Biden has proposed lowering it to $3.5MM per individual and increasing the tax rate 5%.  If you are currently in an estate tax situation, you may want to consider utilizing the extra exemption now as the IRS has promised not to claw it back if legislation changes. 

Hold off on your renewable energy investments and electric vehicle purchase 

Biden has proposed many different tax credits to expand tax deductions for things like energy technology upgrades and smart metering.  He also is looking to restore the full electric-vehicle tax credit.  If you are in the market for any of the above, consider holding off until next year when you may get additional tax savings. 

Bonus: Consider using cash instead of securities to donate to charity 

If you are charitably inclined and were considering donating to charity this year, you may want to consider doing it via cash instead of low basis securities.  The CARES Act increased the amount you can give to charities and receive a deduction for in 2020.  The limit has been raised to 100% of your AGI.  Each individual’s situation is different, so please discuss with your tax professional before making this decision. 

As with all tax legislation, everyone’s position is unique, so please discuss with your trusted advisor to determine if any of these moves might make sense for you. Always consult with your tax preparer how these items apply to your personal situation. 


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Eric Vogt, CFP®

Wealth Advisor

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