Inflation has increased almost seven percent from this time last year. Many Americans are concerned with associated tax implications as inflation hits record highs. Independent financial advisor Rob De Lessio of Strategic Wealth Designers joined us on the newscast to discuss inflation and the impact it could have on your taxes. See more financial news at [ Ссылка ].
“As we know, inflation occurs as the cost of goods and services increases, in turn decreasing the value of the dollar,” De Lessio says. “This has been largely impacted by the pandemic and supply chain. Often time, income is adjusted to account for inflation. As income increases, the taxes owed on that income can be greater, although the value has remained consistent due to inflation.”
Inflation indexing is used to adjust cost of living values, such as wages, to compensate for the decrease of purchasing power. While the IRS boosted federal tax brackets for this year, many other adjustments have not undergone changes, which could result in an increase in taxes. Tax brackets often fail to develop with purchasing power during times of high inflation, especially at the state level.
“There is a lot of supporting evidence that indicates that the increase in taxes all around, is among us,” De Lessio says. “This further emphasizes the importance in being invested in tax free accounts such as Roth. It is a more efficient way to grow your money long term, where you do not have to take future rising taxes into account. If you are heavily invested in traditional tax deferred accounts, it might make sense to explore a Roth conversion to grow your money tax free.”
With high inflation, there are potential tax implications that can have a significant impact. To see additional stories surrounding business and economic news for the Cincinnati area, visit [ Ссылка ] and if you have a question for Rob send an email to info@swdgroup.com.
