Biden Tax Hikes
With a tight race behind us, the polls have closed and Joe Biden is the presumed winner of the 2020 Presidential Election. With a change in leadership, it's important for high-earners, corporations, and families to be aware of what important tax changes we may see in the immediate future.
With the tax plan proposed by the Biden campaign, tax revenue would increase by an estimated $3.3 trillion within the next 10 years (on a conventional basis) - assuming all changes are put into effect.
Below is a round-up of the top tax changes we could see under Biden's leadership in the coming years. These tax changes have been proposed by the Biden campaign during his presidential campaign, and are subject to change.
- Income Tax: Revert the 37% tax rate for taxable incomes over $400,00 to the pre-TCJA rate of 39.6%.
- Capital Gains: Eliminate the step-up in basis for taxing capital gains and tax long-term capital gains and qualified dividends at normal income tax rates.
- Payroll Tax: 12.4% Social Security payroll tax on earnings above $400,000. This amount would be split evenly between employers and employees.
- Corporate Income Tax: Increase the corporate income tax rate to 28%.
- Child & Dependent Care Tax Credit: Tax credit maximum raise from $3,000 in qualified expenses to $8,000 - or $16,000 for multiple dependents. Maximum reimbursement rate also rises to 50% from 35%.
- Child Tax Credit: Maximum value raises from $2,000 to $3,000 for children under 17, with a $600 bonus credit for children aged 6 and under. This would become fully refundable as well.
- First-Time Homebuyer's Tax Credit: Reinstate the tax credit that provides up to $15,000 for first-time homebuyers.
- Estate Tax Exemption: Lowering estate tax exemptions to pre-TCJA levels of around $5 million (adjusted for inflation). Currently, the exemption rate is set at $11.58 million.
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