Our April 8, 2021 Alert described a congressional Democrat proposal that would drastically reduce the current $11.7 million lifetime exemption from estate and gift taxes to a paltry $1 million for lifetime gifts and a mere $3.5 million for estates and make other tax increases that generally would be effective January 1, 2022, along with certain other tax increases that would be effective this year. Our June 29, 2021 Alert reported on the Biden administration’s “Green Book” budget proposal that, among other things, would increase federal income taxes for individuals, estates, trusts, and corporations generally effective January 1, 2022, and similarly included certain other tax increases that would be effective even earlier this year.
Those proposals are now front and center in Congress. On Tuesday, August 24, the House joined the Senate in passing a fiscal year 2021 budget resolution bill, which is a precursor to consideration of a budget reconciliation bill that may be voted on as early as September. While the details are still being developed, it is highly likely that such legislation will include tax increase features of the type we described earlier. While passage of such legislation is by no means certain, it is very important to note that as a budget reconciliation bill, it can pass both houses of Congress with only a simple majority vote, because the normal 60 vote threshold needed to override a filibuster in the Senate does not apply to a budget reconciliation bill. (The Republicans used the same tactic to pass the 2017 Trump tax act without any Democrat votes.)
Accordingly, we continue to recommend that taxpayers who have not yet addressed their tax and estate planning situations promptly consult with their advisors regarding tax savings techniques that can be implemented before they disappear.
Please direct any questions to Gunster's Private Wealth Services practice group.
