american-family


What to Know About the American Families Plan

The $1.8 trillion American Families Plan was introduced by President Biden on April 28th as part of the American Rescue Plan, offering such benefits as two years of free community college, paid family and medical leave, child care and Pre-K funding, additional funding to the Affordable Care Act, and an increased Child Tax Credit. These are among some of the changes coming our way if Biden’s ambitious plan makes it through legislation. But, what does this mean for you? 

There will likely be changes to the plan over the coming months, so we can’t yet say for certain. However, here are a few basics that you should know about the new American Families Plan.

Where Will the Funding Go?

The plan is directed toward education, childcare, healthcare, and other types of family support. As it stands as of July 2021, here is where the funding will be directed: 

Who Will See Higher Taxes?

As this initiative is directed toward helping lower and middle-income families, there will be no tax increases for anyone making under $400,000 per year. If you do make at or more than the $400,000 annual threshold, you will see a tax increase in addition to an increase in gift, capital gains, and estate tax. 

What Changes You May Notice

If the plan comes into effect, you could see changes in the following areas: 

As of right now, if you were to inherit a capital asset, such as a stock, that increased in value over time while the original person was still living and owned that asset, the asset would simply increase to the fair market value when the person died. This adjustment makes it so that the person who inherits the property can sell it without paying capital gains tax. If Biden’s plan were to be pushed through, this would end, leaving the person who inherited that capital asset to pay capital gains tax on the amount that the asset grew while the original owner was still alive.

For example, if Bob were to buy $5,000 in stock decades ago that are now valued at $70,000 at the time of his death, the person who inherits his stock could sell it, but they would not be subject to paying capital gains tax on the $65,000 earned while Bob was still living.

Now, if Bob bought $500,000 worth of stock that was valued at $2 million at the time of his death, the person who inherits his stock could sell it, but they would be subject to paying capital gains tax on any gains above $1 million.

To learn more about the American Families Plan, please visit the White House website for the official fact sheet.

Southwestern Investment Group Can Guide You

Worried about potential changes on the horizon? Help to protect yourself and your family by connecting with a financial advisor who can help you build a comprehensive strategy. Contact Southwestern Investment Group today to schedule a consultation!

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