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Tax Law Changes May Affect Everyone!

Tax Law Changes May Affect Everyone!

| November 08, 2017

As the House's tax bill moves through the Senate, it's anybody's guess what the final changes to income tax law will entail. The proposals regarding corporate income taxes appear to be more clear, and although, in my opinion, having a more competitive U.S. corporate tax rate should increasing corporate profits and capital investment resulting in increasing stock prices, the changes affecting personal tax law may have more of an immediate impact regarding your financial planning strategy.

At this point the current proposals on the personal side include a lot of "give and take." Although the degree of many of the changes appear to be affected by taxable income levels, the "take" portion of the equation impacting most of our clients entail reductions for medical deductions, state income tax/property tax deductions and other itemized and personal deduction issues. On the "give" side, a broadinging of the lowest tax bracket to include significantly more income (although it is proposed to move from 10% to 12%) should reduce the overall "effective" tax rate for many. Higher income property owners with high property taxes may end up paying more in the end result. 

At this stage of the process, it is too early to take any action regarding your financial and retirement planning strategy. However, it is our goal to stay on top of this issue as things become more clear, so we can take necessary action as soon as possible to adapt to the changes that may affect you personally. For those of you who have devoted the time to provide us recent tax returns (or have provided authorization to your accountant to share information with us) and have taken advantage of our comprehensive planning review meetings (you know who you are!), we should be able to review and provide recommendations fairly quickly. Look out for follow-up emails or newsletters on the subject. For those clients who have not completed comprehensive reviews (you know who you are too!), it may be more difficult to quickly provide you input, and the information we will forward may be more general in nature until we can get more of a complete update on your financial picture. 

As always, we recommend you also consult with your tax preparation professional as they should be able to best determine the precise effect tax law changes will have on your final tax liability. Although we do not provide direct tax preparation advice, we will be prepared to adapt your financial/retirement planning strategies to the new tax landscape.

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