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Read the latest financial news from professional advisors at Oxford Financial Partners.

New Administration, New Congress; 3 Possible Changes to Keep an Eye On

Reduction in Estate Tax Exemptions and Rates

  • Roll back the estate tax exemption at death from $11.7 million ($23,160,000 per married couple) to possibly as low as $3.5 million ($7 million per married couple) 
  • Increase in the estate tax rate from 40% to 45%

Implications: The estate tax would affect many more people than it does today. Proper estate planning, asset titling, and charitable giving techniques would have renewed importance.

Proposed New Top Ordinary Income Tax Rate

  • President Biden has pledged not to raise rates for those making less than $400,000 annually. We will see if that ends up holding true. It is also unclear whether this magical $400,000 threshold applies to individuals, or to a couple filing jointly
  • The top ordinary income tax rate could return to the pre-2017 maximum of 39.6%
  • Depending on your filing status and where your income lies within the current brackets, this could mean an increase in your rate of 2.6% (if you are already in top current bracket of 37%) to as much as a 7.6% increase (if you are currently at 32% and would jump all the way to new 39.6%)

Implications: Depends on if/when the new rates go into effect. If that’s 2022, people would be incentivized to accelerate future income (if possible) into 2021 to take advantage of the current lower rates– stock options, business income, extra retirement distributions.

Capital Gains Taxes

  • Tax long-term capital gains at the higher ordinary income tax rates to the extent such gains are in excess of $1,000,000 of income
  • Elimination of the step-up in cost basis at death - Capital gains at death would be passed down to heirs vs. being waived at death
  • Death as a realization event – Not only would the step-up in basis go away, but heirs would have to pay that capital gains tax immediately vs. spreading it over their lifetime as they saw fit

Implications: The “hold until death” approach goes from being an excellent tax planning strategy to possibly a very bad one! The hope would be that the elimination of the cost basis step-up would come with some sort of exemption or coupon to offset the damage. Regardless, strategies to increase gifting and liquidate investments while living would become critical.


A new administration, regardless of political affiliation, always invites the possibility of change. You should familiarize yourself with what policy changes may be coming forth in the near future, and the resulting implications for your family.

For decades, Oxford has been helping clients sort through what’s important, and has been partnering with clients to build a plan and portfolio in anticipation of volatility, not in reaction to it. We’d be honored to do the same for you and your family. If you have questions or concerns about what the new administration’s proposed agenda means for your financial plan, click HERE to learn more and to schedule a “Get Acquainted” meeting with us today.