More Year-Ahead Tax Planning

Following on last week’s 2023 Year-End Tax Planning come several key tax moves to consider over the next year or two. These moves do NOT need to be made by year-end 2023 but still need to be top of mind, especially for those in higher tax brackets and those having accumulated significant savings.

Plus, for those approaching retirement and looking to accumulate tax-free monies down the line, there are considerations too. Why bring up this topic now? Because the 2017 tax cuts, set to expire in 2025, did lower the top tax bracket AND expanded the very reasonable 24% tax bracket. Use the lower brackets while they still exist.


  • For those NOT in retirement and with high incomes (how high? Ask your CPA) consider Roth IRA conversions before the highest tax brackets go UP. Yes, these conversions involve tax payments to be paid today in cash (not from the converted Roth IRA monies). BUT the tax bill will be lower at present rates, if the tax cuts are not extended by Congress. This strategy can also be important to consider for those approaching retirement – meaning maximize current income to pay the tax bill.


  • In the area of estate planning and gifting of assets, the gifting, or “exclusion”, limit was increased in the 2017 tax cuts and will go back down significantly after 2025, if no new laws are passed. Current law allows nearly $13 million to be transferred through gifting (and over $25 million for married couples). The gifting amounts will be cut in half if the pre-2017 levels resume. Although a $7 million estate still sounds high, remember the $7 million (or $13 million for couples) includes all assets including homes, whose values can appreciate significantly over time.

This second point can apply to a number of age-groups, especially those still working with grown children, high incomes, and declining expenses. Assets and savings can grow significantly over time. Some level of gifting can serve to manage future tax bills and “freeze” values at current tax rates*. There are a number of trust structures available, depending on personal needs and wishes.

Increase awareness of additional tax considerations over the next one to two years. A conversation with your financial advisor today in conjunction with an estate attorney is timely.

*Bailey McCann, October 4, 2023.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.


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