Taxpayer asks:

Are tax rates locked in at start of year ??

I’d like to do a Roth conversion in early Jan 2021.  Can I count on Trumps current tax rates ?  If Biden would wins, could he change the rates before year end ??

Taxgirl says:

Even though we like to call tax policy names associated with the President in office at the time of the change or rate (ie “Bush tax cuts”), it’s not actually the President who is responsible for tax policy: that’s Congress’ role.

The rules that changed as a result of a Tax Cuts and Jobs Act (TCJA) are slated to stay in effect largely through 2025. That won’t change if we get a new president. It will only change if Congress changes the law.

And while it’s true that the President has influence over tax policy, that doesn’t mean that there’s automatic change. Consider the TCJA. President Trump took office on January 20, 2017. The House didn’t pass the TCJA until December 19, 2017 (and did it again the next day because of a procedural issue). The Senate passed the bill on December 20, 2017. The TCJA was signed into law by President Trump on December 22, 2017, almost a full year after the President took office. Even then, most of the provisions of the TCJA didn’t go into effect until 2018.

So that’s a long way of saying that I don’t expect any significant tax changes in 2020, even if there’s a new president. That’s especially true if the composition of the House and Senate doesn’t change much (remember, Congress has to be on board with any presidential tax policy).

And even if a tax bill gets pushed through in 2021, it’s unlikely to apply to the 2021 tax year. Most tax bills aren’t retroactive especially when it comes to tax rates for exactly the reason you mentioned (reliance on current law when making financial and tax decisions). I could be wrong – because Congress has been unpredictable of late – but such a change would be unusual at best.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.

Author

Kelly Erb is a tax attorney, tax writer and podcaster.

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