As we approach the end of the year it is helpful to reflect on steps that can be taken to reduce taxes that otherwise would be due. When asset values are down, many advisors are reluctant to bring up charitable giving with their clients. They shouldn’t be. We had an extremely long bull market until recently. Many of your clients still have huge profits in the form of appreciated assets that will eventually be taxed if the right planning isn’t done.
While there always is talk of changes in the taxes applicable to individuals, little has changed this year, so far. After the Democrats’ “Build Back Better” legislative agenda seemed all but dead, a surprise change of heart by Senator Joe Manchin (D-WV) led to the passage of a slimmed down version of the bill named the “Inflation Reduction Act.” Significantly, the Inflation Reduction Act (Public Law 117-169) did not include many of the individual tax changes that the Biden Administration originally proposed and that were included in the various iterations of the House of Representative’s version of the Build Back Better Act. Nevertheless, the Inflation Reduction Act did include some tax incentives relevant to individuals.
The following are possible end-of-year planning ideas as well as the most significant legislative proposals that could affect individuals this year or beginning in 2023.