As the 2024 election approaches, retirement and soon-to-be retired clients are more concerned about the future of federal income taxes than the direction of the stock market. The Tax Cuts and Jobs Act (TCJA) is set to expire at the end of 2025, potentially increasing tax obligations for some taxpayers. Republicans want to maintain the TCJA tax breaks and lower taxes for corporations, while Democrats support allowing the TCJA to expire for high-income taxpayers and rolling back tax breaks for corporations.

The outcome of the election will determine changes to the U.S. tax code, depending on which party controls the White House and Congress. If Trump is re-elected with a Republican majority, taxes are likely to remain stable. However, if Harris wins with a Democratic majority, taxes are expected to increase. A divided Congress may result in compromise and uncertainty, potentially impacting market volatility.

Regardless of who wins the election, higher taxes are expected in the long run to address Social Security and federal deficit issues. To minimize tax liability, advisors suggest considering a Roth conversion, especially for mature clients with retirement savings. Taking this step could reduce the amount owed to the government over the course of a retiree’s lifetime.

With two incumbent candidates running for president, clients have the freedom to choose based on their priorities and values. While Trump is seen as a pro-business, lower tax candidate, the overall impact on the economy and stock market may depend on factors like Fed policies and external events. The election offers an opportunity for individuals to consider various factors beyond just the economy and taxes when making their decision at the voting booth.

In conclusion, the 2024 election will bring about changes in the U.S. tax code, with implications for taxpayers, retirees, and the overall economy. Clients are advised to plan for potential tax increases and consider strategies like Roth conversions to minimize their tax liability over time. Ultimately, the election presents a chance for individuals to exercise their freedom of choice, considering a range of factors beyond just economic policies when selecting a candidate.

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