House Democrats Release Tax Proposal

John Kirsch

Sep 17, 2021

Recently House Democrats released a draft proposal of federal tax changes. Included in the proposal are numerous tax increases. These are proposals only at this point but provide some insight into changes that may eventually become law. Some of the key provisions:

Individual Taxes

Starting in 2022, the top income tax rate would increase from 37% to 39.6%, impacting individuals with income of $400,000+ and income for married couples of $450,000+.
Individuals and married couples with incomes greater than $5 million would be subject to an additional 3% surtax.
For transactions after September 13, 2021, the maximum tax rate on capital gains would increase from 20% to 25% for certain high income individuals. This would result in two separate capital gain tax rates for 2021.
Qualified Business Income deduction would be limited.

Impact on Business Taxes

The 3.8% Net Investment Income Tax (NIIT) would be expanded to include active business income.
The top tax rate for C-Corporations would increase from 21% to 26.5% for taxable income over $5 million.
Changes to various foreign tax provisions.

Impact on Estate Tax and Retirement

Estate tax exemption created in 2017 would be reduced to $5 million.
Some sophisticated estate planning techniques would be limited.
Individuals with tax preferred retirement account balances that exceed $10 million would not be able to make additional contributions and Required Minimum Distributions (RMDs) would be accelerated.

Again, to date, these are only proposals. Kirsch CPA Group is closely monitoring any changes that may soon come down the tax pipeline and keeping our clients informed is our priority entering into this next tax season.

Your tax strategy needs to consider these potential changes. Please contact your Kirsch CPA Group client relationship manager with for help navigating these potential changes.