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Tax implications for individuals in a changing economic climate

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April 2020


Both individuals and businesses face a rapidly changing economic environment as a result of COVID-19. Many individuals have seen steep declines in the value of their investments, with income as well as estate and gift tax planning implications. Furthermore, to stimulate the economy, the Federal Reserve has made two emergency rate cuts over the past month, bringing the federal funds rate down between 0% and 0.25%. These adjustments suggest re-examining existing financing arrangements and considering refinancing higher interest rate loans, possibly borrowing money. The following are some responses to the current economic environment that individuals may wish to consider.

The takeaway

The planning techniques outlined above may allow individuals in appropriate situations, in consultation with their tax advisor, to be in a position to leverage the current low interest rate environment and depressed value of assets to both lessen income tax implications and augment their wealth transfer goals.

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Frank Graziano

Personal Financial Services Leader, PwC US

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