Eaton Vance Management (Eaton Vance) and Parametric Portfolio Associates LLC (Parametric) announced today that the Eaton Vance Parametric Investment Tax Calculator available at eatonvance.com/mytaxrate and parametricportfolio.com/mytaxrate has been updated to enable individual investors to evaluate the potential impact on their personal income taxes if the new tax proposals announced by President Biden on April 28, 2021 are enacted into law.
As part of his American Families Plan, President Biden has proposed increasing ordinary income tax rates for individual taxpayers earning at least $400,000 to 39.6% and eliminating the preferential treatment of long-term capital gains and qualified dividends for those earning $1 million or more.
When combined with the 3.8% net investment income tax, the maximum federal tax rate on ordinary investment income would increase from 40.8% to 43.4% and the maximum federal rate applicable to qualified dividends and long-term capital gains would rise from 23.8% to 43.4%. Including state and local income taxes, individual taxpayers in 15 states and the District of Columbia would face maximum tax rates on investment income and gains of more than 50%, with applicable maximum rates reaching a high of 58.2% in New York City, 57.3% in Multnomah County, Oregon and 56.7% in California (statewide).
The Eaton Vance Parametric Investment Tax Calculator is designed to help U.S. individual taxpayers and their advisors better understand the income taxes they pay on their investment income and gains so they can make more-informed investment decisions. Based on user inputs of annual taxable income, tax filing status and place of residence, the calculator determines the total tax rate – including federal, state and local income taxes – that applies to an incremental dollar of an investor’s in-state and out-of-state municipal bond interest income, U.S. Treasury interest income, other taxable interest income, qualified and non-qualified dividend income, net realized long-term and short-term capital gains, and qualified retirement plan withdrawals. The calculator provides comprehensive coverage of the federal, state and local income taxes applicable to the investment income and gains of resident individual taxpayers across the 50 states and the District of Columbia. As updated, the calculator also provides individual investors the opportunity to evaluate the potential impact of the Biden tax proposals on their personal income taxes.
About Eaton Vance
Eaton Vance is a recognized leader in a broad array of income strategies, including floating-rate bank loans, high-yield bonds, emerging-market debt, mortgage-backed securities and municipal bonds. Within equities, Eaton Vance is a leading provider of tax-managed, equity income and option overlay strategies. With a history dating back to 1924, Eaton Vance applies principles of fundamental investing to the active management of equity, income, alternative and multi-asset portfolios on behalf of individual and institutional investors. Based in Boston, Eaton Vance also maintains investment offices in London, Dublin, Tokyo and Singapore. Eaton Vance is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley. For more information, visit eatonvance.com.
Parametric uses investment science to build and manage systematic investment strategies and to implement custom portfolio solutions providing clients with targeted investment exposures with control of costs and taxes. Based on principles of intellectual rigor, ingenuity and transparency, Parametric seeks to deliver repeatable client outcomes with consistently high levels of service and maximum efficiency. Parametric has managed assets on behalf of institutions, high-net-worth individuals and fund investors for more than 30 years. Headquartered in Seattle, Parametric also has offices in Minneapolis, New York, Boston, Westport, Connecticut, and Sydney, Australia. Parametric is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley. For more information, visit parametricportfolio.com.
The output of the Eaton Vance Parametric Investment Tax Calculator is for educational purposes only and should not be considered investment, legal or tax advice. It is intended for use by U.S. individual taxpayers resident in the 50 states or the District of Columbia, and is not applicable to trusts, estates, corporations or persons subject to special rules under federal, state or local income tax laws. The indicated tax treatment of investment income and gains applies to positions in securities held outside qualified retirement plans and other tax-deferred or tax-exempt investment vehicles. The output is general in nature and is not intended to serve as the primary or sole basis for investment or tax-planning decisions.
Tax rates indicated as resulting from enactment of the proposed tax increases announced by President Biden on April 28, 2021 are the combined federal, state and local income tax rates that would apply to an incremental dollar of investment income and gain if the proposed tax increases are enacted. The proposed new maximum rates are assumed to apply to all individual taxpayers whose taxable income equals or exceeds the indicated thresholds, regardless of tax filing status. Tax rates applicable to municipal bond interest income and qualifying withdrawals from Roth IRA and Roth 401(k) retirement accounts would not change if the announced proposals are enacted. The Biden tax proposals are preliminary and subject to change, and may not be enacted into law.
For more individualized information, you should consult your tax advisor or investment professional. You bear sole responsibility for any decisions you make based on the output of the Eaton Vance Parametric Investment Tax Calculator. The calculator makes certain assumptions that may not apply to you. The calculator has many inherent limitations, and individual results may vary.
©2021 Eaton Vance Distributors, Inc. Member FINRA/SIPC
Two International Place, Boston, MA 02110
SOURCE Eaton Vance Management