Wealth Planning Updates
As we move into the fourth quarter of the year, there are several planning items we wanted to cover for you. One of the most impactful ways to mitigate income taxes is through charitable giving. This can be accomplished through direct gifts of appreciated securities to charities or to a Donor Advised Fund (DAF). With a DAF, the deduction is captured in the year of the contribution, however the distributions to charities can be spread over several years.
If you are age 70 ½ or older, another powerful tool is the Qualified Charitable Distribution (QCD). This year, you can donate up to $105,000 directly to qualified charities from your IRA. If you are subject to required minimum distributions, the transfer will also count toward satisfying the requirement. Beyond reducing taxable income, a QCD could reduce your Medicare premiums under the right conditions.
Moving into 2025, we have our eye toward continued planning for major portions of the 2017 Tax Cuts and Jobs Act (TCJA) that are slated to expire at the end of next year. This includes reversion of tax rates and brackets to inflation adjusted pre-TCJA levels, the expiration of the $10,000 limitation on the state and local tax deduction, and a halving of the current estate and gift tax exemption. The upcoming election will influence the impetus to explore further estate tax planning strategies and income tax planning strategies such as bringing 2026 income into 2025 and ROTH conversions at lower tax rates.
As always, we are vigilant in exploring opportunities to help our clients plan for the near and long term. Please reach out to us if you have any questions or would like to discuss anything we’ve covered further.
