As we have discussed in a previous issue of E2E’s weekly newsletter, the current low income and capital tax rates are set to expire on December 31, 2025. Given the significant increase in the US deficit, the general consensus is that the tax rates will go up January 1, 2026.
What tax strategies have you looked at to minimize your taxes? I would make the argument that Roth IRAs, Roth 401k’s and Roth conversions should be top of your list.
The general Roth idea is pay taxes now (either as missing out of reducing income taxes now or in the case of a conversion paying income taxes now) in exchange for having your retirement accounts grow tax-free and being able to tax out withdrawals tax-free (rules apply). Pay lower tax rates now (current income and capital gains) and have withdrawals in the future, during potentially higher tax era, be tax-free. Tax-free is one of my favorite phrases. 😊
Contrary to popular belief NOT all Roth accounts have income limits! Roth 401ks and conversions are NOT limited by income. Roth IRAs are. (But there is a way around that: Backdoor Roth IRA)
If you haven’t explored tax planning with the various Roth options, reach out and let’s review your options and partner with your CPA to make your future more tax-free. (There I go again! 😉)
