CURRENT LAW IN 2021

PROPOSAL

Ordinary Income Tax Rates

Tax Rates

Top Rate 37%

Increases to 39.6% for individuals and married couples with taxable income which exceeds $400,000 and $450,000, respectively. Additional tax of 3% on income exceeding $5,000,000.

Qualified Business Income Deduction

20% deduction for “Qualified Business Income.”

For single taxpayers with $400,000 of income and $500,000 for married couples the deduction would be further limited.

Rates on Capital Gains / Dividends

Top return of 20% plus 3.8% net for investment income 1-year holding period. (Long Term Capital Gains)

Increases to 28.8% (with net investment income) for individuals with taxable income in excess of $400,000 and married couples over $450,000.

Surtax on Net Investment Income

3.8% above $200,000 AGI (single); $250,000 (married); Trusts with income over $12,400.

Modification to also count income derived in ordinary course of trade or business.

Estate/Gift Exemption

Current flat top tax rate of 40% with $11.7 million lifetime exemption, per person.

a)       Lifetime exemption reduced to $5 million.

b)      Also makes change to Grantor Trust transfers and sales.

c)       Changes to valuation discounts for passive assets.

Corporate Tax Rate

Top rate of 21%

Graduated rate of 18% on first $400,000; 21% on income from $400,000 to $5,000,000; 26.5% on income in excess of $5,000,000 and in excess of $10,000,000 flat rate of 26.5%.

Pass-Through Rates

Top rate of 37%

See above (Tax Rates)

Other Changes

a)       Modification of Foreign Derived Intangible Income (FDII) and Global Intangible Low Taxed Income (GILTI);

b)      Modifications to Retirement Plans and Required Minimum Distribution (RMD).