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Tax experts and financial planners are gearing up for a series of potential changes to tax structures when Barack Obama moves into the White House in January.
Changes loom in areas such as tax brackets, capital gains, estate taxes, payroll or Social Security taxes, and the alternative minimum tax. The revisions are likely to mean higher taxes for wealthier Americans, experts say.
"Everything we've been reading and seeing is there's going to be a tax increase for higher-income individuals," says Richard Kasperski, managing partner with Linden Oaks accounting firm Kasperski, Owen & Dinan CPAs LLC. "They say $250,000, but what's uncertain is whether that's $250,000 of earned income or total income.
"So there's a lot of uncertainty."
Robert Yawman Jr., a partner at Rochester money management firm Cooper/Haims Advisors LLC, agrees.
"The campaign rhetoric tended to compare somebody making $250,000 as wealthy," he says. "I don't know where that bar is, but we determine wealth by net worth and not necessarily someone's net income.
"I don't know how to relate to people making $250,000 because, unless you tell me what deductions that particular taxpayer has, I don't know what their real effective tax rate's going to be."
Kasperski says Obama's plan, coupled with the teetering economy, is creating a good amount of fear and anxiety among his clients.
"Those under $250,000 are thinking they're going to be much better off," he says. "In reality, they might not be if they look at the potential phase-outs of itemized deductions, the loopholes that are going to be eliminated and whether they're going to get just a straight tax credit."
President-elect Obama, the Democratic senator from Illinois, pledged to restructure the financial landscape during his campaign for the presidency against Sen. John McCain, R-Arizona. The question now becomes which of Obama's promises will be implemented, and how quickly.
"For the successful small-business person - I'll define that as someone making over $250,000 - their tax bill is definitely going up," says Thomas Wolf, managing partner at Rochester accounting firm Mengel, Metzger, Barr & Co. LLP.
"While in the short term that is going to be a difficult thing, especially given the economic climate we're in, I think it's long overdue that somebody's willing to stand up and...