This week’s theme is: Biden’s tax plan impact on investors 

Today, I’m talking about the likelihood that the proposed changes from Biden that impact investors will actually become law. Now that the democrats control congress, that likelihood seems very high. 

However, with Covid still front and center, it doesn’t seem likely that will happen in 2021. Maybe 2022 is a better timing for PR purposes? If the economy is in better shape, they’ll likely get less pushback and grumbling among Americans. 

A very important principle in investing is to base your decisions on probability not possibility. Is it possible that taxes will go higher in the next couple years? Yes. Is it also probable? In other words is there a high likelihood that it will happen? The answer here is also yes. 

So I would be preparing now, especially if you’re in a high tax bracket. Even if you’re not, I would still look seriously at a Roth conversion, selling appreciated assets sooner rather than later,  and other ways of potentially reducing your tax bite in the coming years. Or you could just ride it out and see what happens in 4 years...Maybe there will be a new Republician president who will tip the scales in the other direction.

The takeaway here and what’s important to remember is that taxes are very low right now by historical norms. If you have opportunities to accelerate taxes on capital gains, it might make sense to take advantage of the current environment before the tax law changes. 

As always, I’m not a CPA, but I am married to one. My tax advice is free, but I am not a tax advisor and you’re going to want to consult with your tax advisor about the best moves for you. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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