No one likes tax increases. But the new budget proposal from the President could create higher taxes for some taxpayers. Are you one of them?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, discusses some of the provisions of the new Obama budget. Dan notes that while tax rates remain unchanged, new provisions would impose a maximum deduction of 28% for contributions to traditional IRAs and 401(k) plans, even for those in higher tax brackets. The net impact would be to reduce tax benefits for high-income taxpayers, but Dan also points out that past budgets have proposed more sweeping changes that include limiting deductions for charitable contributions, mortgage interest, and other key deductible expenses. Dan concludes that you have to stay aware of proposed changes to be sure whether they'll affect your directly.