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On September 13, the House of Representatives Ways and Means Committee released a set of proposals as part of a $3.5 trillion spending and tax bill that Democrats hope to pass in the fall. If passed, the legislation would advance many of President Biden’s economic and social policies.

Many of the details will likely change as the bill makes its way through a series of deliberations and votes. But the initial draft provides a good deal of insight about what we can expect. Below is a summary of the proposed changes and some key take-aways for clients:

Income and Investments

  1. Increases the top individual tax bracket to 39.6% from 37%, and lowers the threshold for that bracket to $450,000 (married filing jointly) and $400,000 (single filers), from $628,301 and $523,601, respectively.
  2. Enacts a 3% surtax on taxpayers with adjusted gross incomes of over $5,000,000.
  3. Increases the top capital gains rate to 25% from 20% for taxpayers earning over $400,000, effective immediately upon enactment of the bill. As a result, some 2021 capital gains could be taxed at a different rate than others – creating an additional tracking burden, as well as a tax increase.
  4. Expands the 3.8% net investment income tax for taxpayers earning over $500,000 (married filing jointly) and $400,000 (single filers) to include all pass-through income (above and beyond investment income and wage income).
  5. Limits the qualified business income (199A) deduction to $500,000 (married filing jointly) and $400,000 (single filers).


  1. Lowers lifetime gift/estate tax exemption to approximately $6 million from $11.7 million, effective January 1, 2022. Clients looking to maximize exemptions should make their gifts as soon as possible, especially gifts to grantor trusts, in case the date of enactment is moved up.
  2. Includes irrevocable grantor trusts in estates, effective upon enactment. Grantor trusts include irrevocable trusts such as spousal lifetime asset trusts (SLATs), or irrevocable trusts where the grantor has retained a grantor trust power, such as the power to substitute assets in the trust with assets of equal value, or the power to borrow trust assets without collateral. Clients looking to set up SLATs or dynasty trusts with grantor trust powers should do so as soon as possible.
  3. Establishes an income tax on sales to grantor trust by grantor, effective upon enactment. Clients looking to sell assets to grantor trust should do so as soon as possible.
  4. Maintains stepped-up basis at death. In conjunction with reducing their taxable estates, clients should continue to keep highly appreciated assets in their taxable estates to the extent possible. They should also substitute low-basis trust assets (highly appreciated stock) with high basis assets of equal value (cash), if the trusts allow it.


  1. Replaces the flat corporate income tax of 21% with a graduated structure. A top rate of 26.5% applies to businesses with incomes of over $5,000,000. Reduces the rate to 18% for businesses with incomes of under $400,000.
  2. Unfavorably modifies various other provisions including IC-DISCs, global minimum tax, base erosion anti-abuse tax, and foreign derived intangible income.


  1. Prohibits contributions to IRAs with balances of over $10 million and requires distributions once account values reach that threshold.
  2. Regardless of income levels, prohibits conversion to Roth IRAs of after-tax contributions to qualified plans, beginning in 2022.
  3. Prohibits Roth conversions of IRAs and employer-sponsored plans for taxpayers with income over $450,000 (married filing jointly) and $400,000 (single filers), effective in 2032.


  1. Eliminates valuation discounts on transfers of non-business assets, effective upon enactment. Nonbusiness assets are passive assets that are held for the production of income and not used in the active conduct of a trade or business such as family investment LLCs or LPs.  Clients looking to gift family investment LLCs or LPs and claim valuation discounts for lack of control or lack of marketability should make those gifts as soon as possible.
  2. Applies wash-sale and disguised sale rules to cryptocurrency
  3. Limits deduction of compensation above $1,000,000 for top five most highly compensated employees at publicly held companies
  4. Qualified Small Business Stock (QSBS): Effective September 13, the 75 percent and 100 percent gain exclusions on the sale of QSBS stock would no longer be available (i) for taxpayers whose adjusted gross income (AGI) is equal to or greater than $400,000 or (ii) if the taxpayer is a trust or estate. Those taxpayers would still be eligible for a 50 percent QSBS gain exclusion.

For more information, or if you have any questions, visit us online at www.wealthspire.com or contact a member of the Wealthspire team.



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This information should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The commentary provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Wealthspire Advisors cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use. © 2021 Wealthspire Advisors

Brion Collins, CFP®, CLU, ChFC®

Brion Collins is a managing director and head of our Delafield, Wisconsin office.

Richard Yam, J.D.

Rich is senior vice president of trusts & estates, and is based in our New York office.