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Now that the hype and uncertainty of the presidential election are behind us, we can focus on changes to the tax law that may possibly affect Lockheed Martin employees and many other Americans. As a refresher, the last major tax reform occurred from the Tax Cuts and Jobs Act signed by Trump in 2017 and is set to expire in 2025. President Biden’s proposed programs such as the American Jobs Plan and American Family Plan come at a cost, which will be funded through taxpayer dollars.
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- Let’s touch on some of the proposed changes in the tax law and whom it may affect.
- The top bracket of 37% increases to 39.6%. Note that the new highest bracket of 39.6% applies to taxable incomes over $400,000, which is lower than the 2021 thresholds, meaning this new bracket captures tax payers who are currently in the 32% and 35% brackets.
- 2021 marginal tax brackets are as follows:
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2. Long-term capital gains (when you sell an asset for more than its purchase price after holding it for more than a year) will be taxed at 39.6% on income above $1,000,000.
3. The taxation of Social Security is altered as well with income over $400,000 being subject to Social Security tax. This differs from the previous rule which capped the Social Security tax at an income level of $137,700. An unusual taxation gap exists where the excess above $137,700 but less than $400,000 isn’t subject to Social Security tax.
- On the business side of things, the corporate tax rate is increased from 21% to 27% and the deduction for the qualified business income deduction is phased out for taxable income over $400,000.
So, does Biden’s tax proposals affect your tax situation? As you’ve noticed, the $400,000 income figure is critical in these changes, so depending on your income level, your taxes may be increased but if not, it never hurts to be in the know about the tax system. Whether you are affected by the new tax regulation or not, tax planning is of paramount importance as part of comprehensive financial planning. This is where we come in! Our Lockheed Martin Retirement Specialists keep up with the latest tax law changes and we will analyze your financial situation to determine how to minimize your taxes. If saving taxes excites you, book a complimentary meeting to determine if our services are right for you!
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For more tips like these, click here to sign up for our weekly email blog newsletter. If you would like to get better educated on Lockheed retirement strategies, click here to download our Free Report titled Retire with Confidence: The Top 4 Things You Can Do Now to Maximize your Lockheed Retirement. And, if you want to have face time with a Lockheed Retirement Specialist², you can click here to schedule an appointment, click here to sign up for our Lockheed Retirement Workshop or click here to just give us a call (817) 210-3444.
Be sure and check back next week for more incredibly valuable information. Cheers!
Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.
Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.
Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.
SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.
Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.
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