November 1, 2024
Although the markets achieved all-time highs during October, the last two days erased gains, and all three indices finished the month slightly negative ahead of the 2024 presidential election. Not entirely an unexpected occurrence after such a long bull market.
This is the time of year when taxes return to focus.
The Tax Cuts and Jobs Act (TCAJA) will expire at the end of 2025 which means:
1. Estate tax exclusion of $13.61 million will revert to the lower 2016 exclusion adjusted for inflation; expected to be slightly over $7 million in 2026.
2. Previous tax brackets will be restored which includes the top rate of 39.6%.
3. The 20% deduction for small business income expires.
4. The standard deduction declines by a little less than half and personal exemptions are restored.
5. State and local tax deductions return to unlimited instead of the $10,000 cap.
6. The child tax credit is cut in half to $1,000.
7. Lower exemptions and phase out income levels will have about five million taxpayers subject to AMT (Alternative Minimum Tax) versus 200,000 today.
All this is of course subject to change during 2025 by any new administration.
Regardless of the election results, politics are just one facet of what influences the financial markets with quality, growth and earnings, and the health of the economy being significant factors that play an integral part of stock prices.
The yield on the 10-year Treasury note stands at 4.29%, and the yield on the two-year Treasury yield is at 4.17%. Year to date all major indices remain in the black with the Dow, S&P 500, and NASDAQ all ahead 10.81%, 19.62%, and 20.54%, respectively.
*Disclaimer: This report is a publication of Marchand Faries Financial Management, Inc. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the author as of the date of publication and are subject to change.
