Tax Rate Question

[joesxm3]

The current tax rates seem to be in effect until 2025, but is that written in stone?

Is it possible for Congress to decide to pass legislation that would raise the tax rates sooner than 2025?

A lot of the planning discussions I have seen make remarks about doing things for the next few years based on the current low rates. Does it make any sense to consider the possibility that the rates might not last that long.

In my case, I would like to do some ROTH conversions but am 64 and on ACA so I am planning to wait until I am on Medicare and then convert to the top of the 22% bracket. If the second bracket were to jump considerably before 2025, I might consider doing more conversion this year.

With the amount of government spending going on at the moment, it seems that eventually tax rates will have to be raised to pay some of it back, that is, unless they decide to inflate it away. With this hanging over our heads, it does not seem unreasonable to wonder if that might be sooner rather than later, no?

 

[CardsFan]

Congress and the president can always change a law. That said, it is unlikely that any congress or President will act before 2025. Too much in-fighting for that to occur. HOWEVER, when they expire, all bets are off. Depends who is in charge.

 

[pb4uski]

Written in law, not in stone... but as CardsFan says, the law could be changed but I think it is unlkely unless Democrats control the White House, the House and the Senate... and even then I'm not so sure they would change it rather than just let the lower rates expire in 2026 as scheduled so they are not blamed for "raising taxes".

I've been converting to the top of the 12% tax bracket, in part because we were subject to state income taxes. State income taxes go away for us in 2021 and beyond.... so I'll probably convert to top of 22% bracket for 2021-2025... perhaps higher to top of 24% bracket... or perhaps only to the top of the first IRRMA tier... undecided.

 

[Alan]

This is a very difficult election year for many reasons, and the moderation team is enforcing our rules strictly to avoid dissension. Therefore we have decided to close down threads like this before they descend into partisan politics.