During the week of September 12th this year, news began circulating of President Biden’s proposed tax increase to offset up to $3.5 trillion that they plan to spend on the social safety net and climate policy. While it is still in the initial proposal stages, if passed, this tax increase would affect top corporations and wealthy individuals—and thus would also potentially create big changes with things such as estate and gift tax exemptions. This proposed bill would go into effect in 2022. If it sounds familiar that’s because it shares many elements of the 99.5 Percent Act proposed by Senator Bernie Sanders and Senator Sheldon Whitehouse earlier this summer—which proposed many reduced monetary thresholds involving estate and gift federal tax liabilities. Let’s take a deeper look into the details of this new tax increase proposal and what they might mean for you.
On March 25, 2021, Senator Bernie Sanders and Senator Sheldon Whitehouse introduced the “For the 99.5 Percent Act” (referred to in this blog as the “99.5% Act”), a piece of legislation that would change federal estate and gift taxes. Here are the highlights you need to know:
- Reduces the federal estate tax exemption from $11.7 million to $3.5 million
- Reduces the gift tax exemption from $11.7 million to $1 million
- Tax rates increase for gift, estate, and generation-skipping tax (GST) at a progressive rate
Now that tax season is wrapping up, we can all take a deep breath. With the pandemic looming over all of us in 2020, change has become the only thing we can consistently count on these days.