$413,100
If you are married and file joint tax returns, please spray paint this number on your walls. Memorize this number like your life depended on it and financially plan around it (if you're a single filer, the number is $206,550).
Whenever I ask people, “What do you think, are tax rates going up?,” the answer I get 100% of the time is “YES!” Even CPAs bat 1000 on this question.
The next obvious question, if the answer to the previous question is yes, is
“Does your financial planning reflect that belief, or betray it?”
Ever since the Reagan years, the modern tax code has challenged the wisdom of deferring taxes into the uncertain future. But the IRS adjustments to the 2024 tax brackets – one silver lining to the egregious Government created inflation we have experienced in the last few years – make the decision about whether to defer taxes easier than accepting a free First-Class upgrade on an international flight.
For joint filers, the percentages on which you are taxed – 10%, 12%, 22%, 24%, 32%, 35% and 37% - are the same as they were following the Trump tax cuts of 2017. But the bands of income to which they apply have become significantly friendlier.
In my opinion, the sweetest spot in the current tax code is the 24% bracket.
Think about it. You believe taxes are going up. I know you do. Do you realize that after the 2017 tax cuts, if you made $360,000 (a lot of money!) and simply took the standard deduction, your marginal tax rate would only be 24%?* Further, your effective tax rate – what really matters – would only be 19%!
This is why I advocated that anyone making any less than $360,000 had no business deferring taxes, notwithstanding extraordinary situations. By the way, that represents 98.8% of wage earners in America, yet most taxpayers defer all the taxes they can – if they save at all!
As if that wasn’t compelling enough even for high earners, the new rules extend the 24% marginal rate to $383,900. Tacking on the increased standard deduction of $29,200, that gives you the magic number, $413,100, that you can gross and still stay in the 24% bracket. The effective tax rate on that astronomical amount of income in 2024 is still only 19%!
How much money would you be willing to shift into the tax-free bucket if you only had to pay 24% (marginal) or 19% (effective) - or less - today on that money to do so? Would you pay 19 cents on the dollar to eliminate your tax burden forever on that money, or would you rather continue your lifelong joint tax venture with the “Eternal” Revenue Service, in which they are the only partner that has a say about what rate you will pay?
With the US debt at $34 trillion and the net present value of our Unfunded Liabilities well over $200 trillion (bottom, second from right), I believe that TAX RATES ARE ON SALE for a bit longer. When the Day of Reckoning comes, I don’t think we’ll ever see tax rates like this again in our lifetimes.
Final important thought: the Roth IRA is not the only way to make your money tax-free! My business is built around creating tax-free income streams for life.
I will show you how to shift a nearly unlimited amount of taxable money* into the tax-free bucket while tax rates are still on sale, without unnecessary risk, and at the same time create a strategy to build formidable, predictable, inter-generational, tax-free wealth
Have a Merry Christmas and safe New Year!
Tax Rates are on Sale! – December 2023 (Pdf Download)
Contact us for a free 15-minute phone consultation.
Thank you for your time and for taking control of your financial future!
Sincerely,
Sam Arieff
Arieff Consulting
(904) 478-0102
Disclaimer: This newsletter represents the opinion of Arieff Consulting, Inc, and does not constitute financial, tax, or legal advice.
All data from this newsletter can be found on usdebtclock.org, including the mobile app.