News for Professional Advisors

Election season is always an uncertain time, especially when it comes to taxes. For those of you whose clients support charitable causes, you might be wondering how the outcome of the upcoming election could affect their philanthropic plans — and you’re not alone.

Tax law changes often are unpredictable. Changes can take time to be finalized and put into place, so it’s helpful to understand where things stand now and what could happen, depending on the direction elected officials take.

Here's a brief look at a few areas that could be affected:

• Capital Gains Tax: Some proposals raise the top long-term capital gains tax rate for high-income earners. If that happens, there could be an increased incentive to donate appreciated assets to charitable funds.
• Income Tax: Depending on the results, we could see current income tax cuts made permanent or tax credits expanded. Both possibilities have implications for how taxpayers approach charitable deductions, especially considering the higher standard deduction currently in place.
• Estate Tax: A reduction in the estate tax exemption or a rise in tax rates likely would encourage more high-net-worth individuals to make charitable gifts or bequests as part of their planning.

Of course, the election is just one piece of the puzzle. The makeup of Congress also will play a crucial role in whether these changes become law.

Rest assured, the team at the Sioux Falls Area Community Foundation is closely following these developments and will continue to keep you informed — so you can guide your clients with confidence.