What You Need to Know About Joe Biden’s Tax Policy

Posted on September 18, 2020 by resourcefulman

With less than 50 days left until the election, there is no better time to compare candidates – including at the federal, state and local levels – to see how each one can impact your wallet. Here’s more details on Joe Biden’s tax policy and how much it might cost your family.

Income tax rates

Joe Biden says he will not raise income taxes for those earning less than $ 400,000. But he does want to increase thetop tax bracket from 37% to 39.6%, which would overturn the provision of the 2017 Tax Cuts and Employment Act.

Capital gains and dividend tax rates

If you make more than $ 1 million a year, you can also pay more taxes on your investment income. Instead of lower tax rates on capital gains, you can pay regular income tax on these incomes.

Detailed deductions

Only 30% of Americans report deductions on their tax returns; According to the Center for Tax Policy, these are mainly people with higher incomes. Those who list the deductions can see that their tax credit is capped at 28% according to Joe Biden’s plan.

Payroll taxes

If you earn more than $ 137,700, you are currently not paying Social Security taxes on any income in excess of that amount. Joe Biden would like to lift the $ 137,700 income cap to pay for Social Security.

Tax incentives

Joe Biden plans to expand tax breaks for renewable energy sources. He also wants to promote clean energy with tax breaks for new markets and tax breaks for manufacturing communities. It also promises to provide a $ 8,000 tax credit per child to low- and middle-income families. Families earning between $ 125,000 and $ 400,000 will not be eligible for the full tax credit, but may be eligible for a portion of it.

He also wants to help older Americans by expanding the Earned Income Tax Credit. Small businesses can qualify for tax breaks for starting workplace retirement plans, including the automatic 401 (k) option.

Corporate tax rates

Joe Biden plans to raise the corporate tax rate from 21% to 28%. It will also set a minimum accounting tax of 15% for companies making $ 100 million or more that pay little or no federal income tax.

International income

Joe Biden wants to double the rate of offshore tax on global immaterial low tax revenue (GILTI) , limiting the tax breaks for the wealthiest taxpayers who earn money abroad.

Real estate planning

Your investment purchase price is your tax base. If the investment increases before you sell it, you may be in debt for capital gains tax. You can calculate capital gains tax by subtracting the basis from your sales price.

If you die with an investment, your heirs will receive an “increased base” that may correspond to the value of the investment at the date of your death. This can significantly reduce taxes on capital gains when transferring wealth to generations. Joe Biden would like to reverse the step-by-step basic rule.

Other tax policy

Joe Biden has several other notable tax plans: cutting tax havens and outsourcing, closing tax loopholes, stabilizing the Highway Trust Fund , increasing benefits for defined contribution retirement plans , and cutting back on prescription drug advertising .