2014 Potential Income Tax Changes

04-20-2013Tax Information

The tax law is probably going to change in 2013 and chances are, most people will be paying more to the government. The Obama administration is advocating changes to Social Security and placing a heavier burden on those with higher incomes. Understandably, there is not agreement by our elected officials. As of mid-April, here are some of the current proposals that would affect 2014:

  • 30% minimum tax on millionaires – Anyone an Adjusted Gross Income (AGI) over $2 million would have to pay tax equal to 30% of AGI, less a credit for 28% of charitable gifts. The tax would be phased in for those with AGI between $1 million and $2 million.
  • Restrictions large retirement plan balances – Contributions and pension accruals would be barred for individuals with total retirement plan assets over $3.4 million. This includes IRAs, 401(k)s, and defined benefit pension plans and the like. Plan sponsors would be required to report plan balances to IRS. When interest rates were to rise, the ceiling would be lower.
  • Capping the tax value of itemized deductions at 28% – Married couples with incomes over $225,000 and singles over $185,000 that itemize deductions would be limited. This could really affect charitable giving from individuals with larger mortgages, state income taxes and real estate taxes.
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