President-elect Joe Biden’s Proposed Tax Plan

President-elect Joe Biden has proposed a tax plan that could lead to significant changes in current tax law. While these tax changes would need to be passed through Congress, here are some highlights of what has been proposed.

Individuals:

  • Proposals for taxpayers with income over $400,000 include increased tax rates, increased payroll taxes, decreased itemized deductions, and decreased qualified business income deduction
  • Proposes to eliminate the stepped-up basis rule and decrease lifetime estate and gift tax exemption to 2009 levels. This would bring the 2021 level from $11,580,000 down to $3.5 million
  • Proposes increase to capital gains and qualified dividends tax rates for incomes over $1 million
  • Proposes to double the Global Intangible Low Tax Income (GILTI) tax rate and apply country by country
  • Proposes to expand the Child and Dependent Care Tax Credit to a maximum of $8,000 ($16,000 for multiple dependents)

Businesses:

  • Proposes to increase the corporate income tax rate from 21% to 28%
  • Proposes changes to Qualified Business Income (QBI) deduction special qualifying rules, including those for real estate investors
  • Proposed tax credits for small businesses adopting workplace retirement saving plans

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