April 15th has come and gone. For most taxpayers, the instinct is to file the return, pay the liability, and put taxes out of mind for another year. However, there is something worth thinking about before you do. We are currently living through a period of low tax rates, expanded deductions, and a diminished IRS: a window that is favorable to taxpayers, but one that math suggests is unlikely to stay open.
A Uniquely Favorable Landscape
The current environment is arguably the most accommodating we have seen in years. The low individual rates originally enacted in 2018 were extended in 2025, and last year brought a meaningful expansion of the State and Local Tax (SALT) deduction cap to $40,000. For households in high-tax states like New York and California, that change alone represents a substantial reduction in tax drag – capital that can be reinvested rather than surrendered to the federal government.
Concurrently, the IRS itself looks dramatically different than it did two years ago. The agency’s headcount has fallen to roughly 70,000 employees, a reduction of about 30% over the past two years. Following these significant budget cuts, formal multi-year audits on high-income individuals and complex partnerships have plummeted. Lower rates and lower audit activity are, predictably, reducing federal revenue – and that creates a larger problem.
Why this Window Is Likely to Close
The trajectory of the U.S. national debt is, by most reasonable measures, unsustainable. Recent federal deficit charts show a widening gap between revenue and outlays that is difficult to ignore. Closer scrutiny of proposed fiscal solutions from Washington raises concerns about long-term sustainability because the math rarely works. Recent budget proposals have featured 10% structural cuts to certain federal agencies. While this creates flashy headlines, the cuts are largely offset by expenditure elsewhere, such as the White House’s proposed $1.5 trillion defense budget for the upcoming year. Discretionary cuts may look impressive on paper but barely move the needle against the broader structural deficit.
This is the macroeconomic reality and presents a risk to future wealth building. Economists generally agree there are three ways a government can address a structural deficit: cut spending meaningfully, grow the economy at an exceptional pace, and raise taxes.
The first lever is effectively jammed. The kind of entitlement and discretionary cuts that would actually balance the ledger are politically near-impossible. The second lever – relying on an economic miracle of sustained, record-breaking GDP growth to outpace the debt — is probably not a viable strategy. By process of elimination, the burden will likely fall on the third lever. Future administrations will be forced to hunt for revenue, which could mean higher marginal rates and the rollback of today’s generous deductions.
In other words, tax rates may be on sale today. The question is what to do about it before the fiscal environment shifts.
Locking In Today’s Rates
The objective here is not to predict exactly when the tide turns, but rather to position your plan so it benefits from today’s environment regardless of when the shift comes. Several strategies merit consideration now.
Strategic Roth conversions are exceptionally compelling in a low-tax environment. Paying the tax now at a known, lower rate allows assets to grow tax-free thereafter, and just as importantly, insulates a portion of the portfolio from the legislative uncertainty of future tax hikes. A well-funded Roth is also one of the most efficient assets to pass to the next generation.
Accelerating income and gain harvesting also deserves a closer look. For business owners considering a sale within the next five years, an accelerated timeline may be worth modeling. For investment portfolios, strategically harvesting capital gains at today’s rates can reset the cost basis and eliminate a larger future tax burden when rates are likely to rise.
Accelerating wealth transfer is another area where the current rules are unusually generous. Estate and gift tax exemptions remain at historically high levels, and they are a perennial target for revenue-hungry legislators. Moving assets out of the taxable estate now locks in your financial legacy under today’s favorable exemptions.
Maximizing the SALT cap, while temporarily expanded to $40,000, requires deliberate timing of property taxes, state income taxes, and estimated payments.
The Bottom Line
The tax return you just filed is the baseline for the strategic moves worth making today. The combination of low rates, expanded deductions, and a diminished enforcement environment is unlikely to be a permanent feature of the landscape. None of these strategies require predicting exactly what Congress will do; rather, they help improve the long-term outcome of your plan if the fiscal tide turns.
Please reach out to your Wealth Manager to discuss how these strategies fit into your plan.
Weekly Commentary
Why Now May Be the Time to Lock in Today’s Tax Rates
Mallon FitzPatrick
April 15th has come and gone. For most taxpayers, the instinct is to file the return, pay the liability, and put taxes out of mind for another year. However, there is something worth thinking about before you do. We are currently living through a period of low tax rates, expanded deductions, and a diminished IRS: a window that is favorable to taxpayers, but one that math suggests is unlikely to stay open.
A Uniquely Favorable Landscape
The current environment is arguably the most accommodating we have seen in years. The low individual rates originally enacted in 2018 were extended in 2025, and last year brought a meaningful expansion of the State and Local Tax (SALT) deduction cap to $40,000. For households in high-tax states like New York and California, that change alone represents a substantial reduction in tax drag – capital that can be reinvested rather than surrendered to the federal government.
Concurrently, the IRS itself looks dramatically different than it did two years ago. The agency’s headcount has fallen to roughly 70,000 employees, a reduction of about 30% over the past two years. Following these significant budget cuts, formal multi-year audits on high-income individuals and complex partnerships have plummeted. Lower rates and lower audit activity are, predictably, reducing federal revenue – and that creates a larger problem.
Why this Window Is Likely to Close
The trajectory of the U.S. national debt is, by most reasonable measures, unsustainable. Recent federal deficit charts show a widening gap between revenue and outlays that is difficult to ignore. Closer scrutiny of proposed fiscal solutions from Washington raises concerns about long-term sustainability because the math rarely works. Recent budget proposals have featured 10% structural cuts to certain federal agencies. While this creates flashy headlines, the cuts are largely offset by expenditure elsewhere, such as the White House’s proposed $1.5 trillion defense budget for the upcoming year. Discretionary cuts may look impressive on paper but barely move the needle against the broader structural deficit.
This is the macroeconomic reality and presents a risk to future wealth building. Economists generally agree there are three ways a government can address a structural deficit: cut spending meaningfully, grow the economy at an exceptional pace, and raise taxes.
The first lever is effectively jammed. The kind of entitlement and discretionary cuts that would actually balance the ledger are politically near-impossible. The second lever – relying on an economic miracle of sustained, record-breaking GDP growth to outpace the debt — is probably not a viable strategy. By process of elimination, the burden will likely fall on the third lever. Future administrations will be forced to hunt for revenue, which could mean higher marginal rates and the rollback of today’s generous deductions.
In other words, tax rates may be on sale today. The question is what to do about it before the fiscal environment shifts.
Locking In Today’s Rates
The objective here is not to predict exactly when the tide turns, but rather to position your plan so it benefits from today’s environment regardless of when the shift comes. Several strategies merit consideration now.
Strategic Roth conversions are exceptionally compelling in a low-tax environment. Paying the tax now at a known, lower rate allows assets to grow tax-free thereafter, and just as importantly, insulates a portion of the portfolio from the legislative uncertainty of future tax hikes. A well-funded Roth is also one of the most efficient assets to pass to the next generation.
Accelerating income and gain harvesting also deserves a closer look. For business owners considering a sale within the next five years, an accelerated timeline may be worth modeling. For investment portfolios, strategically harvesting capital gains at today’s rates can reset the cost basis and eliminate a larger future tax burden when rates are likely to rise.
Accelerating wealth transfer is another area where the current rules are unusually generous. Estate and gift tax exemptions remain at historically high levels, and they are a perennial target for revenue-hungry legislators. Moving assets out of the taxable estate now locks in your financial legacy under today’s favorable exemptions.
Maximizing the SALT cap, while temporarily expanded to $40,000, requires deliberate timing of property taxes, state income taxes, and estimated payments.
The Bottom Line
The tax return you just filed is the baseline for the strategic moves worth making today. The combination of low rates, expanded deductions, and a diminished enforcement environment is unlikely to be a permanent feature of the landscape. None of these strategies require predicting exactly what Congress will do; rather, they help improve the long-term outcome of your plan if the fiscal tide turns.
Please reach out to your Wealth Manager to discuss how these strategies fit into your plan.
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