Political Change and Taxes - Now What?
Updated: Nov 19
Photo by Louis Velazquez on Unsplash
Tax planning during a political change in Washington is always interesting.
Up until Election Day, we were expecting to see a unified Democratic government next year. This would have almost certainly meant higher taxes across the board, especially for C corporations and high net worth families.
And while that scenario is still possible, pending Senate runoffs in Georgia, as of now it seems likely that the Republicans will retain enough influence in Congress to stop any major tax law changes.
What does this mean for what we do now?
We can treat this as the normal end of a very abnormal year. Depending on how 2020 has gone for your business, we can accelerate or defer deductions, put retirement plans in place, buy new assets, and generally work to save you tax dollars without having to worry about all our best laid plans being overturned immediately.
Congressional gridlock creates a measure of certainty, and certainty allows us to plan more aggressively than we can when there are major question marks about the future. And even if this turns out to be inaccurate, any tax law changes won't take effect until at least tax year 2022, since Congress is not allowed to pass tax changes retroactively that increase taxes.
The time to act is now - get a real tax plan in place and make sure you're keeping as much of your money as possible.