Coming Tax Code Changes & How To Plan For Them
Every election we can remember includes promises of change to Taxation, most of the time for less tax ... but Big Reform is always one of the topics that seems to attach itself to every political candidate.
Then, after the new blood gets into the “Big Chair”, or the old guard settles back down - the budget gets opened and the talks begin. Usually, taxes are added or deductions get eliminated.
Many people expected the corporate tax rates this year to already be 15% lower, based on the election rhetoric of late - but no surprise, the changes to cut tax are always way harder to implement than changes to increase tax. So we haven't seen the change yet.
It is also common that because of promised change, most people avoid Tax Planning because they are “waiting to see what happens.” It’s very human, but often a veiled excuse for procrastination.
Most Tax Planning is not directly attached to a tax change.
A common personal tax plan might include adding an HSA account as a tool so people will stop paying for health care with after-tax dollars. Instead, they can pay those same bills with pre-tax dollars. If the latest Trump tax code changes did happen - how will it affect the advice to open an HSA? Answer: IT WOULDN’T!
If the new code lessens your tax bill from 25% to 15%, then we would advise you to do the HSA now and pay your doctor’s co-pays with a pre-tax dollar and save 25%. But, if you wait until after Trump pushes through the tax cuts you are waiting for, you’ll only save 15%.
Why are we waiting to open an HSA until after Trumps tax cuts go in??
We could give example after example, but the point is this:
Tax code change is constant and so are planning ideas. But waiting until change happens so you can see how it affects you, means never doing anything!
Come in now and let’s talk about how we can save you taxes now, and we will show you current savings PLUS savings when and if new planning goes in.