Expecting Federal Taxes to Go Up

Unless Congress passes a new tax law, Federal income taxes will go up for many taxpayers in 2026.   I expect that this will likely happen for two reasons:

• Inaction by Congress.   It continues to be difficult to pass any laws in Congress.  I don't expect it to get any easier in 2025.
• Spend continues to outpace tax revenue.   The U.S. cannot sustainably keep spending at this pace, without increasing tax revenue.

To address this I am taking two actions:

• Convert as much as possible from Traditional IRAs to Roth IRAs.
• Move cash to municipal bonds or municipal money market funds which are exempt from federal taxes.

If I am wrong, no problem.   Roth IRAs are still a good choice for retirement savings since there is no tax on the withdrawals.   I can easily convert investments exempt from federal taxes back to federally taxable interest.

For more on Strategies and Plans, check back every Monday  for a new segment.

This is not financial nor tax advice. Please consult a professional advisor.

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