Will Your Taxes Be Going Up in 2025?

Will Your Taxes Be Going Up in 2025?

Taxes are a concern for every American, but especially for those who are retired or who will be forced to begin taking required minimum distributions – which are taxed as income – on their retirement accounts in the next year. Current income tax rates fall anywhere between 10% and 37%, but there is reason to believe they could be shooting up in the next few years. Looming changes to the tax code, bloated government programs, and excessive government spending are all combining to create a tax tidal wave that will wash away your nest egg in the near future. Here are some reasons why the team at Crash Proof Retirement® thinks your taxes could be going up beginning in 2025:

Updates to the Tax Code

The Tax Cuts and Jobs Act of 2017 (TCJA) – Also known as the Trump tax cuts – slashed tax rates across the board, providing an average cut of $60,000 for the top 1% of earners and an average cut of $500 or less for the bottom 60%. The bill accomplished tax savings for Americans by lowering individual income tax rates, cutting the corporate tax rate from 35% to 21%, and by increasing both the standard deduction and the Child Tax Credit. Unfortunately, these cuts were all temporary and will be expiring in 2025. Without specific action from Congress, all rates, deductions, and tax credits will return to their previous levels.

Excessive Government Spending

According to the Congressional Budget Office (CBO), government spending in 2024 will be the most it has ever been outside of a crisis. The CBO estimates that spending will increase to 23.9% as a share of GDP this year, up from 20.9% in 2019, before the pandemic began. They also project that federal spending will average 24.1% of GDP over the next 10 years, significantly higher than the 21% of GDP we have seen over the past 50 years. Some of the main culprits for these increases include the very expensive Quantitative Easing program that has propped up the stock market after the financial crises of 2008 and 2020, as well as the various stimulus programs that provided income to individuals and businesses during the pandemic shutdowns.

In the post-pandemic environment, government revenues have failed to keep pace with federal spending, and the increased economic activity from the Trump tax cuts has been less than expected. Many economists believe this will lead to a “day of reckoning” that will have far-reaching effects for all Americans. If the federal government hopes to continue their current level of spending, they will need new sources of income, and tax hikes are one way they could accomplish that.

Social Security and Medicare

Another big portion of federal spending includes Social Security, Medicare, and other programs. With more and more baby boomers beginning to collect benefits from Social Security and Medicare over the past decade, these programs have become stretched to their limits. A recent report by Social Security’s trustees estimates that the program’s trust fund will run out in 2035 – although some believe it could happen as early as 2033. One thing is certain: Social Security’s annual spending will exceed its income in 2024, a trend that is expected to continue for the next 75 years.

The state of Medicare isn’t any better. Spending on the program is projected to rise from 10% of total federal spending in 2021 to 18% by 2032. With healthcare costs rising considerably over the past decade and increased enrollment in Medicare, even those estimates could prove to be optimistic in the long term. Because Medicare is funded primarily by general revenues and payroll tax revenues, raising tax rates seems like the federal government’s most likely strategy to keep the program funded.

How You Can Become More Tax Efficient

At Crash Proof Retirement, we have helped more than 5,000 consumers protect themselves and their retirement savings from taxation. The financial vehicles utilized in the Crash Proof Retirement® System qualify for the exclusion ratio, which allows our clients who are 59 ½ or older to enjoy a 10-year income and have 85% of that income be tax free on their non IRA money. We can also show you a little-known IRS law to prevent you from having to take RMDs and pay taxes on that part of your savings. By applying this law, your accounts would become immune to any tax increases and you would be able to pass that account to your heirs tax free as well. Lastly, Crash Proof® Vehicles grow tax-deferred, which means you can avoid paying taxes on the money held in them until which time you withdraw it. After all, why should you have to pay taxes on money you’re not using?

The Crash Proof Retirement® System offers tax benefits that no stock market investment can offer, and a range of other benefits perfect for those in or near retirement. If you want to know more about how a Crash Proof Retirement works, the best thing to do is schedule your free financial checkup with our licensed independent retirement educators who will tell you secrets just like the ones in this article that you will never hear about from traditional Wall Street financial advisors. Traditional financial advisors know about all these methods that can reduce taxation for their clients, but they don’t recommend them because they depend on the up-front and ongoing fees they get from risky securities-based financial vehicles like stocks, bonds, and mutual funds. At Crash Proof Retirement®, we only recommend investments that will benefit you the most, and we will never take a penny in management fees or other fees from your accounts. If you don’t believe us, consider the fact that we record every single client meeting, and we are willing to share those recordings with you. This creates a legally binding guarantee that any advice we give you will be the best solution for you.

Call Crash Proof Retirement today at 1-800-722-9728 to schedule your free financial checkup today and find out why so many consumers are going to Crash Proof to protect themselves from risk, fees, and taxes.