How Should You Prepare for a Possible Capital Gains Tax Increase?

Joshua Dobi |

Current events are always popular topics with our clients. Especially when it comes to how those current events affect the client financially. Recently, a popular current event has been the talk of a possible capital gains tax increase.


Capital gains are the profits you make from selling your investments such as financial investments, real estate, personal property, or collectibles. In recent weeks, the new administration has hinted they might increase the capital gains tax rate as a way to pay for several different bills they would like to see passed through congress. Although nothing has changed or is scheduled to change as of the writing of this blog post, there has been a lot of noise in the media for people who are higher-income earners.


So, what could a potential capital gains tax increase mean for you and your finances? Here is our three-point summary:


There is still a step up in cost basis on non-retirement, or non-qualified, assets at an account holder’s passing.

What does this mean for you? Simply stated, it could actually make more sense for certain people, in certain situations, to receive assets as part of an inheritance. So, instead of “gifting” an asset while a person is still alive, they may want to hold onto the asset and allocate it as part of an inheritance at the time of their passing. From a tax standpoint this can be very advantageous.


Definitely take a look at a step up in cost basis as one of your planning tools.


Look at the balance of qualified and non-qualified assets in your portfolio.

If you are in a professional space, it is likely you will have a larger balance in qualified, or retirement, assets than you have in non-qualified assets. This does not apply to everyone, but we see it a lot with people who work in the corporate world. Meaning, they have a large portion of their portfolio in qualified, or pre-tax, or tax-favored types of investments.


The kinds of distributions that come out of qualified plans are not applicable to this capital gains discussion. There may be an expansion of this discussion to include this point but as of now, it is not relevant as tax law sits today.


Keep paying attention.

There are a lot of moving parts. There have been some seismic moves in our financial position as a country – a lot due to COVID-19 – over the last year. Some of these have been positive, and others not so positive. The best thing to do is to keep paying attention and if you have questions, feel free to reach out to the team here at Oakwood Financial Group.


If you have questions about your financial goals or would like to talk with us further about our services, give us a call at (412) 928-8801 or visit us at If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.


These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.