At Pathstone, we are always looking ahead to potential economic, legislative, and regulatory changes that could impact our clients. Over the past two years it has grown increasingly challenging to plan, under the threat of significant near-term adverse income and transfer tax legislation. The passage of the 2022 Inflation Reduction Act, which excluded almost all previously proposed individual tax provisions, and the outcome of the 2022 mid-term elections, which will seat a divided 118th Congress, means significant tax changes affecting 2022 and 2023 are now likely off the table. While smaller bipartisan and special interest focused tax changes remain possible, we feel confident that the planning environment has normalized and that we won’t see another major catalyst for tax policy change until the 2024 general elections. Accordingly, the following outlines current law and provides a framework of considerations and opportunities to explore as part of traditional year-end planning. As always, please engage your Pathstone advisory team to help assess opportunities and their potential application and appropriateness to your family’s unique planning situation.

Equities rallied in October on stronger than anticipated earnings from “old-economy” companies and on the possibility that the Fed may slow the pace of rate hikes. Tech companies struggled to find their footing and produced lackluster growth for Q3. The U.S. economy broke its streak of negative quarters of real GDP at 2 on stronger than anticipated net exports and personal consumption. Good news for growth meant bad news for inflation as headline CPI came in hotter than expected and ticked higher on a year-over-year basis.