Previous | Why keeping up with the Joneses is never a good idea Next | How you give is as important as what you give
October 05, 2021 / Erin Sunday
Tax Law Changes: A closer look at individual taxes and what the changes mean for you

Tax Law Changes: A closer look at individual taxes and what the changes mean for you

A new presidential administration often means a variety of new tax law changes. In this four-part series, we’ll offer a closer look at some of the tax law changes being proposed by President Joe Biden and the House Ways and Means Committee. The series will include a review of the American Families Plan, estate and gift tax changes, corporate tax changes, and today’s post — individual tax changes.

Please keep in mind that many of these changes are, at this point, still proposed changes and will not officially become part of the tax law until they are enacted by Congress.


Payroll Tax Changes

  •  The Social Security Tax “cap” is removed, and a 12.4% Social Security old age, survivors, and disability insurance (OASDI) tax is added for income over $400,000. The tax will be split equally among employers and employees.
  •  A “donut hole” exists since wages between $142,500 and $400,000 are exempt from OASDI. This is intended to make up the gap between Social Security inflow and outflow while not overtaxing the upper-middle class.Man reviews tax information on computer


Income Tax Changes

The 39.6% top marginal tax rate that applies to Single taxpayers making over $400,000, Head of Household taxpayers making over $425,000 and Married Filing Jointly taxpayers making over $450,000 is restored.

  • A 3% surtax is applied to Adjusted Gross Income over $5 million.
  • The Net Investment Income Tax (NIIT) is expanded.


Capital Gains Tax Rates

  • The current top tax rate on capital gains and qualified dividends increases from 20% to 25%.


Retirement and 401k Changes

  • Contributions to ROTH and traditional IRAs are banned if the total value of the individual’s IRA and defined contribution accounts exceeds $10 million.
  • New Required Minimum Distribution (RMD) rules for individuals with IRAs and defined contribution retirement accounts with balances over $10 million and $20 million are instituted.
  • ROTH conversions for Single taxpayers with income over $400,000 and Married Filing Jointly taxpayers with income over $450,000 are eliminated.



Erin Sunday is the Vice President, Investment & Trust Services Relationship Manager at F&M Trust.

Recent Articles
How you give is as important as what you give
How you give is as important as what you give

How you give is as important as what you give

September 25, 2023 / Matt Berger

Pay off debt by utilizing your home’s equity
Pay off debt by utilizing your home’s equity

Pay off debt by utilizing your home’s equity

September 18, 2023 / Alicia Beecher and Dave Kuhns

The basics of health saving accounts
The basics of health saving accounts

The basics of health saving accounts

September 11, 2023 / Levi Crouse

How do I open my first account?
How do I open my first account?

How do I open my first account?

September 04, 2023 / Danielle Ritter

How Secure is Social Security?
How Secure is Social Security?

How Secure is Social Security?

August 28, 2023 / Warren Hurt

How do I improve my credit score?
How do I improve my credit score?

How do I improve my credit score?

August 21, 2023 / Courtney Shauf

Don't be the victim of a texting scam
Don't be the victim of a texting scam

Don't be the victim of a texting scam

August 15, 2023 / Ray Wills

The cost of college life
The cost of college life

The cost of college life

August 10, 2023 / Joel Huffer

How to safeguard access to your accounts
How to safeguard access to your accounts

How to safeguard access to your accounts

July 19, 2023 / Jordan Peffer

Join our e-newsletter

Sign up for our e-newsletter to get new content each month.

NOTICE: YOU ARE LEAVING F&M TRUST!

You are now leaving the F&M Trust website. Links to third-party sites are provided for your convenience. Such sites are not within our control and may not follow the same privacy, security or accessibility standards as ours. F&M Trust neither endorses nor guarantees offerings of the third-party providers, nor is F&M Trust responsible for the security, content or availability of third-party sites, their partners or advertisers.