The Tax Cuts and Jobs Act was signed into law in late 2017, effectively lowering the tax bracket for America’s highest earners from 39.6% to 37%. Most us, however, are somewhere between 22% and 32% and we don’t pay taxes on everything we make. Nonetheless, the new law has made us all pause and rethink how we save and give. We’re looking at creative ways to to protect what you have and bring down taxes.
Here’s what the wealthiest among us are doing:
- Not waiting until the end of the year to plan;
- Having regularly scheduled meetings with their financial advisor;
- Owning land that can be taxed as a “conservation easement” or green space;
- Owning stocks and working with their investment advisor to actively manage capital gains and losses for tax advantages;
- Structuring a limited liability company, LLC, to manage investments and deducting management fees as a business expense;
- Taking advantage of the temporary doubling of exemptions (until 2025) for estate and gift deductions to lower taxable income;
- If you’re a business owner, consider a defined-benefit plan (like a pension) to set aside more tax-deferred money than you can in a regular 401(k).
Of course, these ideas to protect and grow income by lowering tax liability may not work for your particular income and tax bracket, but it may pay to find out now. There’s still time to weigh options and make changes. Call our office for an appointment.
PS: You can still take a deduction for charitable giving, but you have to itemize your taxes and the TCJA nearly doubled the standard deduction to $12,000 for individuals and $24,000 for married couples, making it a higher bench over which to climb.