- September 28, 2021
- Posted by: Stratford Team
- Category: Business
The potential tax rate increases that the Biden administration and its allies in Congress are proposing may be an accelerating factor in completing business sales.
Depending on the amount of increase finally agreed upon, sellers will walk away with substantially less from a deal if they wait until the new rates go into effect, observed Michael De Prima, tax principal with Top 10 Firm CliftonLarsonAllen in Denver.
“The proposed changes have injected uncertainty into the world of mergers and acquisitions,” he said. “The rate for individuals would revert from its current 37% back to 39.6%. And the rate on qualified dividends and capital gains for those making more than $1 million, currently at 20%, will likely go to 25%. The House has walked back Biden’s original proposed rate increase, initially set to mirror the individual rate of 39.6%, to 25%. Whatever the final agreed-upon figure, the likelihood of rate increases are very high.”