In late 2017, Congress passed the “Tax Cut and Jobs Act,” which reduced marginal income tax rates; roughly doubled the standard deduction amount while eliminating personal exemptions and limiting itemized deductions related to mortgage interest, casualty losses, and state/local income tax payments; and introduced a special “qualified business income” deduction for income received from eligible trades or businesses.

When it comes to taxes, there’s only one thing you can count on: change. This means your tax planning strategy needs to be flexible so you can make adjustments as tax laws are revised and your life evolves for events such as getting married, receiving a promotion or new job, starting a business, adding a family member, getting an inheritance, retiring, etc. While considering all of these factors takes time, the good news is that in many cases they provide tax-savings opportunities you can take advantage of.

In addition to flexibility, it’s vital to weigh both the short- and long-term impact of any tax-planning decision. People can sometimes be so focused on reducing their current-year tax liabilities they make choices that end up costing them more in the long run — they don’t see the forest for the trees. To avoid this, you need to consider both your current and future life goals as well as be knowledgeable of existing and proposed income, estate, and gift tax rules.

Finally, a good tax planning strategy must be proactive. The vast majority of tax-savings moves must be made before the end of each year; if you wait until January 1, you lose many of your options to reduce your prior-year tax amounts.

These three concepts — flexibility, awareness of the short- and long-term trade-offs of your choices, and being proactive — make up the foundation of an effective tax-minimization plan. With these guiding principles in place, specific tactics can then be identified and implemented based on your unique circumstances, goals, and values.

The Wealth Conservatory® is not licensed to and does not engage in the practice of rendering legal or tax advice. Any discussion of either is for informational purposes only and you are strongly encouraged to seek appropriate counsel prior to taking action.