Tax Season Brings Smiles to Wealthy Clients After Lawmakers Extend Breaks
As tax season approaches, many wealthy Americans are feeling happy. The reason? Congress has made a series of tax breaks permanent. These breaks mostly benefit high-income and high-net-worth individuals.
A New York tax consultant, Gary Phillips, says his clients are pleased. “We have a lot of happy clients,” he notes. “There’s more certainty now.”
The changes were approved in July. They lock in a friendlier tax climate for the affluent. While middle-class families may see small benefits, the largest advantages go to the wealthy.
Who is considered “wealthy” in this context?
Tax expert Zane Sanchez says the benefits start for individuals making over $200,000. For married couples, the threshold is $250,000.
Here’s a look at six key provisions that favor upper-income families:
1. Lower Tax Brackets Are Here to Stay
The 2017 Tax Cuts and Jobs Act (TCJA) temporarily lowered the top tax rate. It dropped from 39.6% to 37%. This change was set to expire in 2025.
Now, the 37% top rate is permanent. It applies to income above $626,350 for individuals and $751,600 for married couples.
2. A Big Deduction for Business Owners
Owners of certain businesses get a major break. These are “pass-through” entities like LLCs, S corporations, and partnerships.
The 20% “pass-through” deduction is now permanent. It effectively lowers the top tax rate on business income from 37% to 29.6%. Experts call this a huge win for entrepreneurs and high-net-worth individuals.
3. “Bonus Depreciation” for Big Purchases
Businesses can now immediately deduct the full cost of major assets. This includes things like machinery, company vehicles, and equipment.
As one tax expert put it, “Not everybody can go out and buy a private jet—but if you can, now that private jet is deductible in year one.” This provides a significant upfront tax saving for businesses that make large investments.
In summary, the extension of these tax provisions has created a more predictable and favorable landscape for affluent taxpayers and business owners.
