With fewer than 50 days until the election, there is no better time to compare candidates—including those at the federal, state, and local levels—to see how each one may impact your wallet. Here’s a closer look at Joe Biden’s tax policy and how much it may cost your family.
Income tax rates
Joe Biden says he won’t raise income taxes for anyone making less than $400,000. But he does want to increase the top tax bracket from 37% to 39.6%, which would reverse a provision from the 2017 Tax Cuts and Jobs Act.
Tax rates for capital gains and dividends
If you make more than $1 million per year, you may also pay more taxes on your investment income. Rather than lower capital gains tax rates, you may owe regular income taxes on those earnings.
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Itemized deductions
Only 30% of Americans itemize deductions on their tax return; mostly higher-income folks, according to the Tax Policy Center. Those who itemize deductions may see their tax benefit capped at 28% under Joe Biden’s plan.
Payroll taxes
If you make more than $137,700, you aren’t currently paying Social Security taxes on any income above that amount. Joe Biden would like to remove the $137,700 income cap to pay for Social Security.
Tax credits
Joe Biden is planning to expand tax credits for renewable energy. He also wants to promote clean energy with the New Markets Tax Credit and Manufacturing Communities Tax Credit.
He also pledges an $8,000 tax credit per child for lower and middle-income families. Families making $125,000 to $400,000 won’t qualify for the full tax credit, but they may be eligible for part of it.
He also wants to help older Americans by expanding the Earned Income Tax Credit. Small businesses may qualify for a tax break for starting workplace retirement plans—including an automatic 401(k) option.
Corporate tax rates
Joe Biden plans to raise the corporate tax rate from 21% to 28%. He would also establish a minimum book tax of 15% for companies making $100 million or more that pay little to no federal income tax.
International income
Joe Biden wants to double the Global Intangible Low Tax Income (GILTI) offshore tax rate by capping tax breaks for wealthy taxpayers making money abroad.
Estate planning
Your purchase price of an investment is your tax basis. If the investment increases before you sell it, you may owe capital gains taxes. You can calculate the capital gains tax by subtracting the basis from your sales price.
If you die with investments, your heirs get a “step-up in basis,” which could be the investment’s value on your date of death. This can significantly reduce capital gains taxes on generational wealth transfers. Joe Biden would like to eliminate the step-up in basis rule.
Other tax policies
Joe Biden has a few other noteworthy tax plans: reducing tax havens and outsourcing, closing tax loopholes, stabilizing the Highway Trust Fund, improving the benefits of defined contribution retirement plans, and cutting deductions for prescription drug ads.
Further reading about Joe Biden’s tax policy
If you’re a fellow tax nerd and want to learn more about Joe Biden’s tax policy, you can visit his website. You may also see an in-depth analysis of each proposal through the Tax Foundation and the Committee for a Responsible Federal Budget.
