June 4, 2021
A lot of attention in the wealth management industry has been paid to President Biden’s efforts to raise taxes, especially those related to inheritance and capital gains. A quick refresher on the changes: Biden wants to create a step-up in basis at the time of death, meaning heirs would use the original price of the asset as their basis for taxes, not the price at the time of inheritance, resulting in a massive tax increase. Perhaps even more pressingly is the hike in capital gains tax up to 39.6% for those earning over $1m. But here is the new surprise in Biden’s recent budget: the changes will be retroactive to April 28th.
FINSUM + Magnifi: This is a very significant change, but not an atypical one, as it is standard procedure to try to minimize tax minimization strategies. That said, experts think Congress will likely not apply this retroactive date to whatever legislation materializes.
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