Summary of Biden Tax Plan on Individuals

 

Taxpayers with under $400,000 in taxable income:

  •  Expands the Earned Income Tax Credit (EITC) for childless workers aged 65+.
  • Expands the Child and Dependent Care Tax Credit from $3,000 to $8,000 ($16,000 for multiple dependents).
  • Increases the Child Tax Credit from $2,000 to $3,000 for children under 18, providing a $600 bonus credit for children under 6.
  • Provides First-Time Homebuyers’ Tax Credit up to $15,000.
  • Expands the Affordable Care Act’s premium tax credit.
  • Creates a refundable renter’s tax credit.
  • Provides a refundable tax credit for traditional retirement accounts in place of traditional deductibility.

 

Taxpayers with over $400,000 in taxable income:

  • Increases payroll tax on income earned above $400,000.
  • Increases individual income tax rate for taxable incomes from 37% to 39.6%.
  • Taxes long-term capital gains and qualified dividends at 39.6%.
  • Limits the tax benefit of itemized deductions.
  • Phases out the qualified business income deduction.
  • Expands the estate and gift tax levels.

Summary of Biden Tax Plan on Businesses

 

The following proposed business tax changes:

    • Increases the corporate income tax rate from 21% to 28%.
    • Creates a minimum tax on corporations with profits of $100 million or higher.
    • Doubles the tax rate on income earned by foreign subsidiaries of US firms from 10.5% to 21%.
    • Establishes a Manufacturing Communities Tax Credit to reduce tax liability on businesses that with layoffs or a major government institution closure.
    • Expands the New Markets Tax Credit and makes it permanent.
    • Offers tax credits to small business adopting retirement savings plans.
    • Expands several renewable-energy-related tax credits,
    • Imposes a new 10 percent surtax on corporations that “offshore manufacturing and service jobs to foreign nations in order to sell goods or provide services back to the American market.”
    • Establishes an advanceable 10 percent “Made in America” tax credit.
    • Eliminates certain real estate industry tax provisions.
    • Increases the generosity of the Low-Income Housing Tax Credit.

Note this summary by Kathryn Sharp, CPA is based on the analysis by from the non-partisan Tax Foundation.

Link: The Tax Foundation

 

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