Post-Election Coverage

New Administration Coverage: Tax & Regulatory Policy Updates

Stay up to date on the latest tax proposals and regulatory developments of the Biden administration and Democratic-controlled Congress. View a summary of Biden’s tax proposals below and get access to additional resources.

  • Individual Tax Plans
  • Deductions
  • Tax Credits
  • Capital Gains
  • Education
  • Estate and Gift
  • Retirement Incentives
  • Employment/Social Security Taxes
  • Corporate Rate
  • Deductions, Deferrals, & Amortization
  • Corporate Tax Credits
  • International

Individual

Current Law
Individual Tax Rate

JBDemocrat
Joe Biden

Seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37% applicable to tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026. Top tax rate is 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly).

After 2025, rates are scheduled to increase to pre-Tax Cuts and Jobs Act (TCJA) amounts.

Increase the top individual tax rate to 39.6% from 37% for those earning more than $400,000.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Deductions

JBDemocrat
Joe Biden

Basic standard deduction is $12,400 for single filers and married filers filing separately, $24,800 for married filers filing jointly and $18,650 for heads of household. The basic standard deduction is scheduled to revert to pre-TCJA amounts after 2025.

The TCJA suspended the personal exemption and most individual deductions through 2025.

Taxpayers are allowed to take eligible deductions and credits against their income tax liability. The itemized deduction for state and local taxes (SALT) is capped at $10,000.

Limit total itemized deductions so the reduction in tax liability per dollar of deduction does not exceed 28%, which based on 2020 tax brackets would mean that individuals with income over $326,600 (married filing jointly) or $163,300 (single) will have the benefits of itemized deductions reduced.

Phase out the qualified business income (QBI) deduction for income above $400,000.

Cap itemized deductions at 28%. Restore PEASE for incomes above $400,000. End SALT cap.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Tax Credits

JBDemocrat
Joe Biden

A child with an individual taxpayer identification number (ITIN) cannot be claimed for the child tax credit but can be claimed for the $500 other dependent credit. A taxpayer with an ITIN is eligible to claim the child tax credit and the $500 other dependent credit.

Maximum child tax credit is $2,000 for each child under age 17. After 2025, this amount is scheduled to revert to the pre-TCJA amount of $1,000.

Maximum child- and dependent-care credit is $1,200.

Workers older than 65 who do not have a qualifying child are not eligible for the earned income tax credit (EITC).

No tax credit for first-time homebuyers or renters.

Expand dependent care credit to $8,000. Families will get back as a tax credit as much as half of their spending on childcare for children under age 13, up to a total of $8,000 for one child or $16,000 for two or more children. The tax credit will be refundable and will explore ways to make it advanced. The full 50% reimbursement will be available to families making less than $125,000 a year. All families making between $125,000 and $400,000 will receive a partial credit ensuring that in no case will they get less than what they are eligible for today.

Expand the EITC to workers older than 65 who do not have a qualifying child; provides renewable-energy-related tax credits to individuals.

For 2021 and as long as economic conditions require, increases the Child Tax Credit (CTC) from a maximum value of $2,000 to $3,000 for children 17 or younger, while providing a $600 bonus credit for children under 6. The CTC would also be made fully refundable, removing the$2,500 reimbursement threshold and 15 percent phase-in rate.

Enact a $5,000 tax credit for family caregivers of individuals who have certain physical or cognitive needs.

Create a refundable, advanceable tax credit of up to $15,000 to assist buying a first-home. Credit paid upon purchase, not when filing tax return.

Enact a renter’s tax credit, designed to reduce rent and utilities to 30% of income for low-income individuals and families who make too much money to qualify for a Section 8 voucher. Allocate $5 billion in federal funding for the tax credit every year.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of November 2020.

Individual

Current Law
Capital Gains

JBDemocrat
Joe Biden

Top tax rate for capital gains and qualified dividends is 20% for income over $441,450 for individuals and $496,600 for married couples filing jointly. There is also a 3.8% net investment income tax (NIIT).

Taxpayers may elect to defer recognition of, and avoid recognition of future appreciation related to capital gain from certain sales or exchanges of property by investing the gain in a qualified opportunity fund (QOF).

Increase the top marginal income tax rate on long-term capital gains to 39.6% for taxpayers earning more than $1 million annually. Eliminates step-up in basis for capital gains taxation.

Would reform opportunity zones.

The NIIT remains.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of November 2020.

Individual

Current Law
Education

JBDemocrat
Joe Biden

No tax credit for contributions to state-identified not-for-profit scholarship-granting organizations (SGOs), though some amount might be deductible as a charitable contribution.

Loan forgiveness is generally included in income unless an exception applies. Student loan forgiveness is includible in income unless the individual worked for a certain period of time in certain professions for any of a broad class of employers.

Student loans will be cancelled, tax-free, after borrowers have been enrolled in the income-based repayment plan for 20 years.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Individual

Current Law
Estate and Gift

JBDemocrat
Joe Biden

For 2020, the exempt amount for estate and gift taxes is $11.58 million. After 2025, this amount is scheduled to revert to the pre-TCJA indexed amount of approximately $5.8 million.

Transfers of appreciated property at death get a “step-up in basis.”

Eliminate step-up in basis rule that allows people to pass capital gains to heirs without tax after death.

Expands the estate and gift tax by restoring the rate and exemption to 2009 levels. Reduce the exemption amount to $3.5 million and increasing the top rate for the estate tax to 45 percent,

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of November 2020.

Compensation and Benefits

Current Law
Retirement Incentives

JBDemocrat
Joe Biden

Eligible employees can contribute a portion of their salary to a qualified retirement plan (401(k), 403(b), 457, etc.). The deferred salary is not included in taxable income until withdrawn. Penalties apply for early withdrawal.

Not all employers offer qualified retirement plans.

Minimum distributions required when taxpayer turns 72.

Create “automatic 401(k)” for workers without access to pension or 401(k) plans. Allow 401(k) plans to offer hardship withdrawals for survivors of domestic violence or sexual assault and allow penalty-free distributions for such persons. Equalize the tax benefits of defined contribution plans across the income scale.

Allow caregivers to make “catch-up” contributions to retirement accounts, even if they’re not earning income in the formal labor market.

Offer tax credits to small businesses to offset much of the cost of starting or maintaining retirement plans.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Compensation and Benefits

Current Law
Employment/Social Security Taxes

JBDemocrat
Joe Biden

Payroll tax applied on worker’s wages up to $137,700 for 2020. FICA tax of 12.4% split between employer and employee.

Most workers can contribute and get preferential tax treatment on up to $19,500 a year in a 401(k) account (extra $6,500 if age 50 or higher) in 2020. Highly paid executives can contribute an unlimited amount in certain tax advantaged plans.

End employers intentionally misclassifying their employees as independent contractors to avoid paying employment taxes. Lift social security taxable wage base cap on high earners (taxpayers making more than $400,000). Currently, employers and employees would each be subject to a maximum Social Security tax of $8,537.40 in 2020 for each employee. This is based on the 6.2% tax rate for both the employee and employer on the $137,700 wage base, which is adjusted for a cost-of-living adjustment annually.

The 12.4% Social Security (Old-Age, Survivors, and Disability Insurance) payroll tax would be expanded to also apply to an individual’s earnings in excess of $400,000. It is not clear if this additional tax would be borne solely by the employee or split between the employer and employee.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Corporate

JBDemocrat
Joe Biden

Increase the corporate tax rate from 21% to 28%.

Impose a new corporate minimum tax on corporations with book income over $100 million, which would primarily target companies that report little to no taxable income but report significant income for financial accounting purposes. The minimum tax is structured as an alternative minimum tax—corporations will pay the greater of their regular corporate income tax or the 15 percent minimum tax while still allowing for net operating loss (NOL) and foreign tax credits.

Impose a tax penalty on corporations that ship jobs overseas in order to sell products back to America.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of November 2020.

Corporate

JBDemocrat
Joe Biden

Terminate pharmaceutical corporations’ tax break for advertisement spending.

Increase the depreciable life of rental real estate.

End qualified business income deduction for real estate investors. Would take aim at like-kind exchanges and prevent investors from using real-estate losses to lower their income tax bills.

Establish incentives for opportunity zone funds to partner with not-for-profit or community-oriented organizations, and jointly produce a community benefit plan for each investment. Require reporting, public disclosure of community impact, and Treasury oversight.

End special qualifying rules for QBI, including those for real estate investors. Allow deduction to taxpayers making $400,000 and under.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of October 5, 2020.

Corporate

JBDemocrat
Joe Biden

Establish a “Made in America” 10% advanceable tax credit for companies on a broad range of investments designed to create manufacturing jobs in the U.S.

Expand the New Markets Tax Credit (NMTC) program to provide $5 billion in support every year, and make the program permanent.

Establish the Manufacturing Communities Tax Credit to reduce the tax liability of businesses that experience workforce layoffs or a major government institution closure.

Impose a tax penalty on drug manufacturers that increase the costs of their brand, biotech, or abusively priced generic over the general inflation rate.

Expand the work opportunity tax credit to include military spouses.

Offer tax credits to small business for adopting workplace retirement savings plans.

Expand the low-income housing tax credit.

Create a new childcare construction tax credit to encourage businesses to build childcare facilities at places of work. Employers will receive 50% of the first $1 million of construction costs per facility.

Expand several renewable-energy-related tax credits, including tax credits for carbon capture, use, and storage as well as credits for residential energy efficiency, and a restoration of the Energy Investment Tax Credit (ITC) and the Electric Vehicle Tax Credit. The Biden plan would also end tax subsidies for fossil fuels.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of November 2020.

Corporate

JBDemocrat
Joe Biden

10% offshoring penalty surtax on the profits from any production by a U.S. company overseas for sale on American soil, making the overall tax rate on those profits 30.8%.

Double the Global Intangible Low-Taxed Income (GILTI) rate from 10.5% to 21%, and close certain loopholes. In addition to doubling the tax rate assessed on GILTI, Biden proposes to assess GILTI on a country-by-country basis and eliminate GILTI’s exemption for deemed returns under 10 percent of qualified business asset investment (QBAI).

Implement anti-inversion regulations and penalties.

Deny deductions for moving production and jobs overseas.

Information on Vice President Joe Biden’s proposals are largely documented on his campaign website (https://joebiden.com/joes-vision/), as well as from clarifications of those proposals by economists at the Tax Foundation, Tax Policy Center, and the Penn Wharton Budget Model from the University of Pennsylvania.

Other notable sources referenced: www.IRS.gov and The Bureau of National Affairs, Inc. Note: This information is accurate as of November 2020.


Resources & Events

Access timely insights to stay up-to-date on the latest policy developments and potential impacts to your business.

Stay Informed

Contact Our Tax Advisors
 
A number of factors make now a good time to revisit your tax plan, from the impending federal election to stimulus legislation changes and the economy. Contact us to learn about potential moves to make before the end of the year.
Michael-Corrente

Michael Corrente

Managing Director

Boston Tax Practice Leader

617.761.0699

mcorrente@cbiz.com

Joanna-Powell

Joanna Powell

Managing Director

New England High-Net-Worth

Practice Leader

617.761.0583

jpowell@cbiz.com

David-Bussius

David Bussius

Managing Director

New England Tax Practice Leader

401.626.3239

dbussius@cbiz.com