How Inflation Affects Tax, Business, and Estate Planning
Inflation is finally subsiding, yet there is no denying this economic phenomenon made a significant and lasting impact on the country’s increasingly fragile economy. Inflation impacts more than prices.
The devaluation of the American dollar also affects tax, business, and estate planning. Niswanger Law in West Monroe, LA is here to help you and your business overcome these legal hurdles.
Inflation in the Context of Estate Planning
Inflation changes how people plan the distribution of their assets upon death. For one, inflation increases the value of assets, meaning the property has the potential to be assessed at a higher valuation, spurring more taxes.
The value of a home is central to the value of an estate. Estate value is used for assessing potential estate taxes as well as taxes on inheritances.
For example, if you pass away when your home or other assets are at record high values due to inflation, the tax burden will likely be that much greater. Moreover, estate values also have the potential to decline if inflation leads to a recession and the value of assets significantly decreases.
Our estate planning attorney in West Monroe, LA is here to help you brace your family for inevitable financial challenges caused by inflation. We provide guidance for hedging against inflation, tax mitigation, and more.
Why You Need Tax Planning Inflation: Tax Thresholds Are Changing
Tax planning inflation is becoming increasingly important with each passing day. Everyone living and working in the greater West Monroe, LA area should know that tax brackets have changed for 2023. You can earn thousands of dollars or even tens of thousands more in personal/business income and pay less taxes than in prior years.
Standard deductions are now more favorable to workers in and around the area. For example, inflation has increased standard deductions from the ’22 level of $12,950 to $13,850 for single filers. Those who are married and filing jointly enjoy new standard deductions from just under $26,000 to nearly $28,000.
The head of the household’s new standard deduction jumps from $19,400 to $20,800. A married couple age 65+ that files taxes jointly now has a standard deduction of $30,700, marking a first in the history of the United States tax system.
Tax changes extend beyond personal and business income. For example, the federal tax exemption on an estate has increased to $12.06 million in the two years ahead. The estate tax exemption can be altered after ’25 in response to inflation.
Business Taxation Amidst Inflation
Inflation changes tax planning strategies, yet most business owners and managers are busy to the point that they cannot plan accordingly. Fret not, as Niswanger Law in West Monroe, LA is here to provide guidance tailored to your individual business’s tax challenges. Our business tax planners help enterprises make the most of deductions before the point that inflation causes significant devaluation.
For example, the tax attribute value is eroded due to inflation. Inflation causes value reductions in business net operating losses as well as deferred deductions for asset depreciation and amortization.
Aside from tax planning, subtle changes to accounting methods can also help offset potential financial losses resulting from inflation. Business planning in the form of creative accounting within the confines of the law can help your business save thousands of dollars, tens of thousands of dollars, or even more when tax season rolls around.
What matters most is that you ask for help from the experts.
Tap Into the Expertise of Niswanger Law
If you are worried about the impact of inflation, you are not alone. Our business law attorneys are here to help your business in West Monroe, LA. We also serve business owners and managers in surrounding communities. Our legal services extend to estate planning assistance, tax planning, and more.
Reach out to us today for tax planning inflation guidance. The Niswanger Law office is located at 3820 Cypress Street West, Monroe, LA 71291. Give us a call today at (318) 953-0071 to schedule your consultation.