Buzz
With less than 50 days remaining until the election, now is the ideal time to compare the candidates, from federal to local positions, and assess how each could affect your finances. Let’s take a detailed look at Joe Biden’s tax policies and their potential impact on your family’s budget.
Tax Brackets
Joe Biden has pledged not to raise taxes on anyone earning below $400,000. However, he does propose raising the top tax rate from 37% to 39.6%, reversing a change made by the 2017 Tax Cuts and Jobs Act.
Capital Gains and Dividend Tax Rates
If your income exceeds $1 million annually, you could face higher taxes on your investment earnings. Instead of benefiting from lower capital gains tax rates, you may be taxed at the standard income tax rate on those gains.
Deductions for Itemized Expenses
Around 30% of Americans take itemized deductions on their tax returns, mostly higher-income individuals, according to the Tax Policy Center. Under Joe Biden's proposal, those who itemize may find their tax benefit capped at 28%.
Taxes on Wages and Salaries
Currently, if you earn over $137,700, you don't pay Social Security taxes on income above that threshold. Joe Biden proposes eliminating this cap to fund Social Security.
Tax Benefits
Joe Biden aims to expand tax credits for renewable energy and support clean energy through programs like the New Markets Tax Credit and Manufacturing Communities Tax Credit. He also proposes an $8,000 tax credit per child for middle and low-income families. Families earning between $125,000 and $400,000 won’t receive the full credit but may be eligible for a partial benefit.
Biden also seeks to assist older Americans by expanding the Earned Income Tax Credit. Small businesses may be eligible for tax incentives for offering workplace retirement plans, including an automatic 401(k) option.
Business Tax Rates
Joe Biden proposes increasing the corporate tax rate from 21% to 28%. Additionally, he would implement a 15% minimum book tax for companies earning $100 million or more that currently pay little to no federal income tax.
Global Income
Joe Biden intends to raise the Global Intangible Low Tax Income (GILTI) offshore tax rate by restricting tax breaks for high-income earners with foreign earnings.
Planning for Inheritance
Your investment's purchase price is known as the tax basis. If the investment’s value increases before you sell it, you may owe capital gains tax. The capital gains tax can be determined by subtracting the tax basis from your selling price.
When you pass away with investments, your beneficiaries receive a “step-up in basis,” which could be the value of the investment on the date of your death. This could substantially lower capital gains taxes on wealth passed down to future generations. Joe Biden proposes eliminating the step-up in basis rule.
Additional Tax Proposals
Joe Biden has several other key tax policies, including reducing tax havens and outsourcing, closing tax loopholes, stabilizing the Highway Trust Fund, enhancing the benefits of defined contribution retirement plans, and cutting deductions for prescription drug advertisements.
Learn More About Joe Biden’s Tax Policies
For those who are passionate about taxes and want to dive deeper into Joe Biden's tax plans, visit his website. You can also explore detailed analyses of his proposals on the Tax Foundation and the Committee for a Responsible Federal Budget websites.
